Second, these innovations have changed consumer behaviour resulting in us spending a large part of our waking hours on our favourite streams: Facebook (FB), Twitter, Instagram, LinkedIn, to name a few. Adults spend over six hours online daily, of which more than two hours are on social media. In the US, as a result, the percentage of total media consumption time breaks out like this: 37% TV, 24% internet, 24% mobile, 11% radio and only 4% on print. You can begin to guess where consumers are getting their news first.
Third, the effect of the above is reshaping the industry value chain.
The time we spend on them gives social media platforms tons of information about us and that knowledge is of great value to advertisers. In the US, digital ad revenues have increased from $26 billion to $51 billion in the last four years. Google, FB, Microsoft, Yahoo! and AOL generated 61% or 30.9 billion of the 51 billion. This revenue grab means newspaper digital advertising revenues have only increased from $3-3.5 billion in the same period. Adding to the pain, corresponding to the time spent, print ad revenues have been halved to $19.9 billion in 10 years.
The smartphone, consumers living in their social streams and news distribution outside the traditional are changing the publishing industry economics.
How is it in India, though?
In FY 2014, according to the Ficci-KPMG Media and Entertainment Industry report 2015, the print industry in India grew by an impressive 8.3% to approximately $4.4 billion. Of this, 67% came from advertising revenues, projected to grow at a CAGR of 9.7% to become 72% of the industry’s revenues by 2019. The report states that the growth is being propelled by tier II and tier III markets with regional language editions outperforming national editions and English dailies. This resulted in Hindi and vernacular papers having 67% of the ad revenues of the industry.
So is there anything to worry about from the global factors spoken of earlier? India’s internet user base grew over 17% in the first six months of this year to 354 million, according to the Internet and Mobile Association of India (IAMAI). The local language user base grew 47% to reach 127 million in June. IAMAI said that the next set of internet users will come from rural India and the availability of local language content on internet will be the key for the growth of internet industry in India.This growth in content consumption will be aided by smartphones as they are expected to hit 650 million in 2019 from around 150 million today.
The likes of Facebook and Google have quite visibly thrown their weight behind PM Modi’s #DigitalIndia. Google has just promised to enable free wifi in 100 railway stations. Facebook has 118 million monthly users. A Twitter India spokesperson said in an article that there has been a 300% increase in tweets in Hindi in 2014 alone.
The underlying business driver for all these companies is the same. They will attempt to do what has been done elsewhere, get a large part of the growing online audience to spend time on their platforms. This gives them user profiles which will make them attractive to advertisers. Given that the Indian print industry has close to 70% dependency on advertising, it’s a huge future threat.
I think that the next three years will see continuing growth for the Indian print industry but with increasing pressure on the bottomline as the industry tries to add more value at the same price to retain advertisers.
How would I use these three years? I would take a hard look at my content. Make sure that it’s of a nature and quality that makes it a must read for my audience. As a matter of choice, not because of the lack of it. More strategically, I would get ready for the platforms with a platform. A platform uniquely designed for India. What will that look like? The one who finds that holy grail will ensure a future of infinite possibilities.
The author is chief strategy officer, The Economist Group