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 percent 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 released a report under the title “Value retention by newsprint publishers in the MENA region, and developed three major steps that newsprint players today must take to ensure value retention. First, they should optimize 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.
The report also discusses the depletion of value, whereby close to 76 percent of current newsprint readers in the MENA region are expected to either decrease or stop their newsprint readership within a couple of years. However, it also assures that 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,” says the report.
Additionally, the report discusses the three-pronged strategy – the optimization of core operations, digital transformation, and diversification into adjacent businesses by focusing on core capabilities – and proposes ways in which news publishers can ensure growth by finding new revenue streams. Such ways include newsprint players positioning themselves as leading content producers, leading publishing curators, and dominant advertising sales providers.
“To conclude, newsprint publishers have to make strategic decisions about their future. The status quo or tactical moves are no longer viable options. Digitization, rapidly changing consumer behavior, stiff competition from new entrants, and advertising disruption renders their current models unsustainable. Diversification into new opportunities along the media value chain is the only way to ensure a retention of value and future growth,” adds the report.
Click here to download the pdf report by Booz & Company.