Future plc, the UK-based enthusiast publisher that once relied heavily on print newsstand sales and subscriptions, has been in deep turnaround mode making digital a primary focus. And that challenge has been best illustrated in its struggling U.S.-based operations, where after a year of cost contraction through title sell-offs and closures and staff reductions, digital has become a strategic imperative.
With the release of its year-end results, the company says digital advertising now accounts for 40 percent of overall ad revenues (UK and U.S.).
Digital revenues were up 30 percent over fiscal 2011 to $33 million. According to Future CEO Mark Wood, the goal is to generate at least half of overall revenues from digital in the next four years.
The U.S. operation may be getting there more quickly, with digital advertising now representing 58 percent of total ad revenues of $14 million. But this is on the back of major print contraction. In fiscal 2012, which ended September 30, circulation revenue fell 25 percent, with the newsstand down 31 percent. Print subs were down 27 percent and print advertising was down 29 percent.
Digital advertising for the U.S. group was up 14 percent, however. And through significant cost reductions throughout 2012, which included the shutdown of Playstation: The Official Magazine and Nintendo Power, the sell-off of its music group to NewBay Media and the elimination of 78 employees, EBITE losses improved by 44 percent from a negative $6.6 million in 2011 to a negative $3.7 million in 2012.
Despite the print declines and negative profits, Wood says the U.S. operation is on track for profitability in 2013. "Our U.S. operations have been restructured and are heading for profit in 2013," says Wood in a statement. "We are a leading publisher in tablet markets and our online audience has grown by 70 percent to more than 50 million uniques a month. These advances are opening new opportunities and we will accelerate Future’s digital transformation in the year ahead."
A bright spot for the company has been tablet edition sales, which now gross $1 million per month globally based on just over 100 titles in circulation. Global tablet product sales since Apple launched its Newsstand last October have been $9.6 million. In the U.S., MacLife has been Future’s best-selling title on the tablet with about 65,000 copies per month.
The company says 90 percent of digital edition sales are to new customers, with 40 percent outside the core UK and U.S. markets. Sixty percent of those customers sign up for subscriptions and renewal rates are in the 60 percent range.