Over the last decade, publishers have seen many external factors impacting their business models. On the STM journals side, Open Access is being embraced by many publishers, resulting in a larger volume of articles being published even as subscription revenue remains under pressure. On the higher education side, the decline of print revenue and sluggish digital revenue growth has seen publishers struggling with their business models. As for school publishing, the market remains cyclical. The trade side is somewhat different, with self-publishing making rapid strides, especially when Amazon and many other platforms are supporting self-publishing.
In response to the above market dynamics, there has been a flurry of restructuring activities at the publisher level, be it the revival of HMH (Houghton Mifflin Harcourt) through a Chapter 11 process, the purchase of McGraw-Hill Education by Apollo, the debt restructuring at Cengage (also through a Chapter 11 process), and the merger between Penguin and Random House.
The story was similar in the publishing services supplier side: MPS Limited was purchased by ADI BPO Services Limited from Macmillan; Aptara was purchased by iEnergizer; an 80% stake in SPi Global was purchased by CVC Capital Partners from Philipine Long Distance Telephone (PLDT) Company; and Lumina Datamatics was created by folding Datamatics data conversion services into PreMedia Global. The next round of consolidation has already started with MPS Limited purchasing Element LLC, EPS, and TSI Evolve—all three based in the U.S.—and assembling a large war chest for further acquisitions.
All these changes mean that some publishing services companies will emerge stronger through the process and be the market leaders of the future. The successful publishing services companies are likely to be end-to-end players servicing the needs of the academic, educational, and self-publishing market segments with a strong focus on technology, workflow management, and high quality content creation, production, transformation, and delivery services supplied from multiple geographies. In fact, the publishing services companies of tomorrow with full-spectrum capabilities will increasingly clone the publishing clients that they serve.