What options face the MENA's print media?
In this day and age, digitisation is continuously reshaping the media, with a dramatic impact on newsprint publishing.
Click here to add Bahjat El Darwiche as an alert
Disable alert for Bahjat El Darwiche,
Click here to add Booz & Company as an alert
Disable alert for Booz & Company,
Click here to add Gulf Cooperation Council as an alert
Disable alert for Gulf Cooperation Council,
Click here to add Jayant Bhargava as an alert
Disable alert for Jayant Bhargava,
Click here to add Sami Abou Jamous as an alert
Disable alert for Sami Abou Jamous
The media industry’s business models are particularly vulnerable to digitisation; after all, media outlets such as newsprint publishers rely heavily on the consumption of content that is now widely available for little or nothing elsewhere. In fact, in the Mena region — and despite healthy population growth — readership levels of newsprint have started to decline.
And, although there are new readers entering the readership age profile, approximately 70 per cent of them are skipping the print versions and becoming digital-only consumers. These developments are, in turn, challenging Mena newsprint publishers’ business models, causing a structural depletion of economic value. In line with this, management consulting firm Booz & Company has developed three major steps that newsprint players today must take to ensure value retention. First, they should optimise operations by choosing where they want to be on the media value chain, and then consider where to make structured cost cuts. Second, they need to launch a digital transformation. Third, they should further strengthen the core capabilities that position them for the growth in adjacencies and build new revenue streams.
Depletion of value
Today, close to 76 per cent of current newsprint readers in the Mena region — who have excellent digital connectivity — are expected to either decrease or stop their newsprint readership within a couple of years. This is causing a rapid and sustained decline in readership.
These advertisers spent disproportionally on newsprint players as an effective way to reach a mass audience aside from the costly airtime, with high spill over, available on pan-Arab satellite TV.
In the Mena region, the decline in advertising revenue will proceed at an even gentler pace than in developed markets because of the resilience and dominance of local newsprint advertising spend. Indeed, the value of the newsprint advertising market in Saudi Arabia may actually grow a little in the coming two to three years in nominal terms. The market will, however, start to drop in value in 2016 with steeper declines in 2017 and future years because of digital disruption.
In reality, digitisation levels are particularly elevated in the affluent Gulf Cooperation Council (GCC) markets, where the overwhelming majority of newsprint customers have access to broadband.
The response of many newsprint players has been to meet the challenge of digital disruption with investments in digital initiatives. However, although digital transformation is essential, it is not sufficient to recover the value lost within traditional operations. Simply put, the commercial model on these new platforms is weaker than in print. In contrast to the limited and valu¬able advertising real estate previously enjoyed by print, digital is far more competitive and fragmented.In addition, the way-to-play in the digital space demands more than simply evolving internal capabilities and is significantly different to what newsprint players are used to.
Newsprint players should respond to the digital challenge in a manner that provides them with opportuni¬ties for growth. This requires a three-pronged strategy: the optimisation of core operations, digital transformation, and diversi¬fication into adjacent businesses by focusing on core capabilities.
Optimise core operations
The first agenda that regional newsprint players should adopt is to optimise their operations by making them more effi¬cient and effective. This helps newsprint publishers to safeguard, and get the most out of, their traditional business; these existing lines of business matter because they are likely to account for the majority of revenues in the short to medium term.
Launch digital transformation
The second agenda for newsprint publishers is to design a digital transformation that addresses the changing dynamics across two fronts: readers and advertisers. On the readers’ front, digital trans¬formation is vital because user behavior toward media and news is changing rapidly thanks to new platforms, devices, and applications. The digital transformation is different from the reflexive digital initiatives taken by many newsprint players.
On the advertiser front, user dynamics are prompting disruptive responses in light of steadily declining readership. In response, newsprint players need to offer a compelling set of digital advertising solutions to remain in the game.Executing such a digital transformation requires a deep understanding of the segmentation pertinent to digital audiences. This entails understanding the digital audience segments; facing advertising disruption; getting the digital story right; and, building successful models for digital newspapers.
The third major step for newsprint players is to access new revenue streams by diversifying into adjacent value pools playing on extensions of core capabilities. Although the efficiency agenda and digital transformation are critical imperatives, they will not fully offset the depletion in economic value. These core capabilities are likely to coalesce around the three major positions that leading newsprint players around the world have adopted in response to the disrupted media market: leading content pro¬ducer, leading publishing curator or dominant advertising sales provider.
By: Bahjat El Darwiche, Jayant Bhargava and Sami Abou Jamous
- US, EU protectionist policies may be a blessing in disguise for GCC suppliers
- Dubai to Doha: How far can you stretch your dirham?
- Tunisia 2020 investment conference: 145 mega projects on offer
- GCC tax on expats' income and remittances would be highly regressive: IMF
- 'The worst is over for Qatar's trade balance': BMI Research
- Digital advertisement industry faces a reality deficit
- The formidable challenge facing print media
- Xerox’s New Printer is Versatile for Any Environment; Offers More Media Options; Easier Ways to Get Work Done
- Egyptian printing industry faces new crisis
- The 50 most powerful people in media, marketing and advertising in MENA