The digital solutions industry is very much a product of its time. Its end consumers—especially those who tote mobile devices and demand information on the go—are the ones whose changing preferences have created such disruptive companies as Airbnb, GoFundMe, Snapchat, and Uber. Improved technologies, newer tools, and increased efficiency have fueled the quest for more innovative ideas and faster value creation in this age of Instagram and influencer networks.
Some of the big publishers, too, are looking at technology to lead the pack and bolster their bottom lines. In fact, the acquisition of technology—or technology-based companies, to be specific—has been a popular business strategy. Elsevier bought Plum Analytics in February, barely 10 months after purchasing Social Science Research Network. During that period, Wiley acquired Atypon, Cengage bought WebAssign, and McGraw-Hill Education took over Redbird Advanced Learning. And just within the last two months, Taylor & Francis jumped onto the acquisition bandwagon by taking over the digital research firm Colwiz while Bertelsmann Education acquired WhiteCloud Analytics.
What is unmistakable is the high level of interest coming from the big players when it comes to publishing solutions, digital learning products, research management tools, and predictive analytics. In fact, technology is such a big part of these companies that some no longer call themselves publishers. They are now purveyors of learning science, information analytics, education technology, or content-enabled solutions. And they are no longer satisfied with outsourcing technology-based requirements to suppliers onshore or offshore the way they did in the past. They are acquiring, integrating, and assimilating such companies and tools into their internal business processes.
But, while the publishers and digital solutions players are looking into faster time to market, consumer engagement, and actionable intelligence, parts of the marketplace are in the doldrums. The U.S. education segment, in particular, is contracting—largely because of changing demographics, lower college enrollment, and the rising popularity of secondhand books—causing many educational publishers to experience double-digit decline in sales of textbooks and reference materials. The industry is at the precipice of a fresh round of divestments after a spate of restructuring and retrenchment exercises: McGraw-Hill has sold off its K–12 business to Nelson Education, and Pearson is now considering selling off its U.S. school courseware unit and its stake in Penguin Random House.
Adding to the uncertainties is the confusion set off by the current White House administration in its proposed budget and stance on education (and Common Core standards), immigration, visas, and outsourcing, as well as federal funding for the arts, humanities, research, libraries, and education. The potential impact and rippling effects from these uncertainties has moved water-cooler speculation into boardrooms.
During PW’s trip to India to visit participants in this report early in the year, some digital solutions vendors—and their main U.S. clients in some cases—were already rethinking their business collaboration with plans of forming partnerships or joint ventures to sidestep the IT outsourcing/immigration issues. Some are looking into setting up branches in the U.S. to offer onshore and hybrid services, while a few more are checking out companies to take over and therefore have immediate U.S. representation.
Meanwhile, the packaging of internal processes as modules and products for sale and the strengthening of data mining capabilities to deliver better metrics and market intelligence to publishing clients have continued unabated. These digital vendors are now the extended arm of their publishing clients, working and thinking on their behalf. Their existence, growth, and futures are intricately interlinked with those of their clients.
Right now, publishers and their vendors are in the same boat. They are busy transforming and dealing with market uncertainties, changes, and challenges. And, while UI/UX, fixed-layout ePub, accessibility, IP protection, and plateauing e-book sales continue to be hot industry topics, there are also plenty of unspoken concerns about—and cautious optimism in spite of—the current difficulties and uncertainties.