Diversification Is Continued Imperative for Mag Industry

PwC Entertainment and Media Outlook report predicts flat revenue growth for magazine circulation and advertising over the next five years.

A study conducted by consulting firm PwC confirms what many publishing leaders already know: As advertising and circulation revenues decline, diversification becomes a business imperative. “Advertising for print is down. Circulation is down. Revenues are projected to be flat,” says PwC partner Greg Boyer. “To make up for these declines, magazine publishers need to innovate in a variety of ways.” In particular Boyer sees mobile and video as a bright spot for the publishing industry.

According to the Global Entertainment and Media Outlook 2017-2021 report released in June, the compound annual growth rate (CAGR) for magazine circulation and advertising revenue over the next five years is 0.19%. In terms of dollars, that’s a mere $300 million increase, approximately, in industry revenue.

PwC predicts that print advertising will take the biggest hit, with ad revenue for consumer magazines dropping from approximately $13.5 billion in 2017 to $6.7 billion in 2021. For B2B print ads, revenues are projected to decline from approximately $3.4 billion to $1.9 billion over the next five years. Digital advertising will offset these revenue losses, keeping ad revenue flat. PwC predicts circulation revenue will continue to decline for consumer magazines at -0.61% CAGR and grow for B2B publishers at 3.69% CAGR.

If this picture seems dire, Boyer says that he expected worse and is surprised at print’s resiliency in the face of disruption. “I thought that the revenue drops for print circulation and print advertising would have been a bit more severe,” says Boyer.

It’s clear that those streams alone do not spell growth for the industry. Instead, publishers need to drive revenue from a variety of products including video, mobile applications, and live events.

And though publishers are already well on the way to diversifying their revenue streams, it’s hard to get a read on how “alternative” revenue streams are tracking. Many industry revenue reports focus on print circulation and advertising, and digital advertising, but not taking into account where diversification and growth is occurring. Ultimately this approach paints the industry in a more dour light than may be the case if all business lines were taken into consideration.

Boyer says that PwC plans to expand the revenue streams it measures in the coming years. “Every year we evaluate the report for the next year. We will continue to add new revenue streams particularly because we have so much disruption in the industry.” That change in reporting is critical to publishers’ understanding of where to direct their diversification efforts.

In the following interview Boyer shares his biggest takeaways from PwC’s Global Entertainment and Media Outlook Report as well as advice for publishers looking not just to survive the next five years, but thrive.

read more/source: http://www.pubexec.com/article/adv-circ-dwindling-diversification-continued-imperative-mag-industry/