With speculation afoot about an increasing pace of publishing industry consolidation driven by digital disruption, as well as solid examples like the recent John Wiley & Sons acquisition of CrossKnowledge, there are plenty of signs pointing to a rising tempo of publishing and digital media M&A. So it’s interesting to read a more substantial analysis of the near-term prospects, which could perhaps slightly cool the ardor of eager deal seekers.
According to industry research center IBISWorld, “the Internet Publishing and Broadcasting industry has attracted a myriad of new entrants due to exponential growth in internet traffic volume and the increasing number of mobile internet connections. With its low barriers to entry but extremely high barriers to success, this industry has allowed independent content producers to enter the cluttered digital space. Startup companies, however, face fierce competition.” Bear in mind that publishing in their sense means any operation releasing media to the Internet, not book publishers: This still remains an interesting trend and an interesting space for truly publishing-related deals, as Wiley recently showed.
Furthermore, the sector is “expected to have a low risk level in 2014 as it continues in the growth stage of its life cycle,” according to IBISWorld, which “calculated a risk score of 3.55 out of 9.00, with 9.00 representing the highest risk.” In other words, there is no major technological trend under way now that is about to deliver another wave of disruption.
“While some players allow newly acquired companies to continue operating independently, others have been purchasing cross-platform and mobile startups in order to access new users or niche audiences, located domestically or overseas,” continues the IBISWorld report. ” The acquirer’s motives may be to purchase a company it fears will disrupt its dominance in the market, to increase its presence in new markets or to help capitalize on changing trends … Major players have also acquired smaller startups to obtain patents or intellectual property assets.” And, it adds, “although the industry is facing heavy consolidation, the constant inflow of new startup companies is outpacing this trend, while the number of internet publishers and broadcasters is expected to continue increasing rapidly.”
The full text of the study is available here.