The print industry in this decade is being defined by two overarching trends. First is the decline of traditional markets, like book printing and newspapers, in the face of competition from electronic alternatives. Second is the challenge to established analogue print platforms from the latest generation of digital – inkjet and toner – print systems.
The two trends are not mutually exclusive however, digital print is a value-adding option and its ability to add variable data and customisation can help reinvigorate segments where traditional print is most under threat. This is not a cost-free exercise – digital remains a more expensive option for runs above a certain fairly modest level. Though this can be compensated for my some labour and production savings, there is still an onus on print service providers to evolve their business model to capitalise on these opportunities.
The critical transition underway is analysed and quantified in depth in the recent Smithers Pira report The Future of Digital vs Analogue Printing to 2020. Smithers Pira’s data shows that in 2010, as printers worldwide were still recovering from the 2008 crash, the equivalent of 50.7 trillion A4 sheets were printed worldwide – with 49.8 trillion, or 98.1%, on analogue presses, principally offset machinery.
In 2016 total print volume is largely unchanged, though analogue’s share has declined to 97.3%, and will fall further to 96.5% in 2020.
The full impact of digital presses is illustrated more forcefully if overall value is considered. The Smithers Pira data shows that in a global print market worth $811 billion in 2010, 9% of this revenue lay with inkjet or toner output. This share rose to nearly 15% in 2016, and will be 17.6% at the decade’s end.
Segments in transition
The transition to digital is not a uniform process however. Certain segments like printed signage and ceramic tile print are now dominated by inkjet systems, while analogue can still account for 99.8% of volume in a segment like catalogue printing.
Providing in-depth forecasts for every end-use application is beyond the scope of this article. It is instructive however to examine the role digital is playing in three of the most important publication print segments as overall output decline:
- Books – this is a $32.1 billion market in 2016, down from $38.0 billion in 2010
- Newspapers – worth $41.7 billion in 2016, as opposed to $51.4 billion in 2010
- Catalogues – valued at $31.0 billion in 2016, falling from $38.5 billion in 2010.
Despite dire prognoses for each segment, digital equipment can and is enabling at least some businesses within them to stay competitive despite a hostile environment.
Book reading has suffered severely from the online revolution. The long-term impact of e-readers, like the Amazon Kindle, may have been overemphasised – unit sales for these devices peaked in 2011. Demand for printed books is still shrinking however, in face of competition from online leisure activities, like surfing the Internet and gaming; as well as a new generation of tablet computers that have displaced dedicated e-readers.
In 2014 research firm Nielsen Books reported online books sales in the UK overtook physical sales for the first time. This trend can further damage profitability as online sales are frequently concentrated on a single seller – Amazon – which can, some argue, exert too much power over the publishers whose books it sells.
In response publishers are looking at new business models. One such is long-tail publishing. Established publishers hold a large back stock of titles still under copyright, stretching back for as much as a century. Demand for these is limited however, and can rarely justify regular print runs of thousands of volumes as required to make litho printing cost-efficient. This leaves interested customers at the vagaries of the second-hand book trade.
Publishers have realised they can monetarise these back titles thanks to digital print equipment. These have much reduced set-up times and wastage in make ready and trial runs is virtually eliminated, making very short runs or even single editions financially viable. Such long-tail titles are increasingly being made available on a print-on-demand basis, after an order has been received. Here the Internet provides a vital tool for connecting the reader with obscure or specialist titles, and web-to-print software allows the manuscript to be delivered to the print service provider in a cost-effective manner that also enables fast turnaround.
The rapid turnaround enabled by digital also allows publishers to exploit new time-sensitive opportunities. This can involve commissioning a commemorative biography following the death of a popular figure – as happened in early 2016 with the musician David Bowie – or to commemorate an event, like the winning of a sports championship.
Variable data print is very easy on digital platforms. One new application of this for book printing is in personalised books. For example, key words in a Christmas story can be rewritten to make a child believe the story takes place in their home town; alternatively an older classic – like Pride and Prejudice – given as a gift can be altered so the characters’ names are those of the book’s recipient and his or her friends.
A more commercial application of this principle is in the text book industry. Web-to-print interfaces linked to digital presses mean lecturers or school governors can design customised text books for their students, only including the components of a long syllabus that they will be taught. This value-adding option is increasingly popular – and lucrative, with the US market alone being worth over $8.5 billion in 2013 (NACS).
The price of books printed this way is slightly more than for a mass-analogue printed title, but this can be accounted for as a customer will be more inclined to pay more for a bespoke or specialist product.
Book printing will see the most radical switch to digital across this decade. Digital had only a 14.2% share of the world market by value in 2010, but Smithers Pira’s analysis shows this will rise to 46.1% of world value in 2020. Only 5% of the volume of this print will be on the new technology in 2020 however, emphasising how digital print is concentrating on the highest-margin areas of book printing.
Arguably no segment of the print market is suffering more from electronic competition, and 24-hour news programming than newspaper print. Titles like The Independent (UK) are ceasing hard-copy production, and revenues from advertising are evaporating, as marketers pursue other media channels.
Coldset litho presses remain the principal technology and in 2016 accounted for 84% of a world market valued by Smithers Pira at $41.7 billion. Inkjet is just 3.7% of the market, and toner’s contribution is negligible.
One solution being offered by Manroland – the German newspaper print equipment manufacturer – is a hybrid litho press with and integrated Kodak Prosper S20 or S30 module. This inkjet unit can print versionised promotions or coupons – enticing advertisers to remain in the physical space. Variable data programming also flexibility meaning editions can be versionised to a specific geographic area, with for example, vouchers individualised to a particular branch of a chain of coffee shops, or a gambling advert with odds tailored for the local sports team’s next match.
A similar option pursued by German newspaper Bild is to have its printer Axel Springer add unique subscriber codes via a digital module. These then grant had-copy subscribers discounted access to Bild’s online edition helping transition the paper’s readers.
These new revenue streams means that despite competing in a price-sensitive market, inkjet’s value in the newspaper segment, which stood at $740 million in 2010, will more than triple by 2020.
Catalogues – Individualising promotions
Supplementary digital printing is also being exploited in catalogue printing – another traditional segment that is looking to innovate in the face of declining overall print volumes, and a target audience migrating to e-commerce.
Using a hybrid press a mail-order catalogue publisher can add a customised attention-grabbing cover, or one or two interior pages, emphasising localised promotions. This approach can be extended as electronic transactions enable sales firms to hold much more data on individual customers.
This so-called ‘Big Data’ revolution can be used to further enhance sales catalogues with the variable data areas now personalised to resonate with each recipient’s previous purchasing history or other known preferences.
Digital print is unable on its own to save the three print product segments profiled above from a major contraction driven by wider changes. What it can do is provide viable business models for those print service providers that remain in these segments and are agile enough to invest and explore new business models.
The global analogue print industry will see a slight rise – 3.9% – across the decade mostly due to expansion into the developing world. The outlook for digital equipment and consumables suppliers is more positive. Smithers Pira data shows this process segment’s market value will more than double across the same period, to reach 17.6% of the overall market in 2020.
The Future of Digital vs Analogue Printing to 2020 contains further global market data and analysis and is available to purchase and download online.
Subscribe to our Market News email alerts >>>