As Tablets Supplant Ereaders, New Challenges Arise for Publishers

James McQuivey, Forrester research

Sixty percent of publishing executives believe that tablets have become “the ideal reading platform,” and 45 percent believe that dedicated e-readers will soon be irrelevant, according to a recent online, by-invitation survey conducted by global research and advisory firm Forrester.

“I would warn you not to take that too seriously yet,” James McQuivey, vice president and principal analyst serving Forrester’s Consumer Product Strategy Professionals division, said when presenting the results of the third annual Digital Book World publishing executive survey yesterday at the Digital Book World Conference and Expo 2013 in New York.

“Just remember that [dedicated ereaders] are devices that don’t need to be upgraded very quickly. So the fact that they’re not selling as quickly as they used to is not necessarily a death knell for that category. And remember that the people who bought them first still read them the most. These are your most voracious customers.”

Still, tablets seem destined to eclipse dedicated ereaders at some point. McQuivey noted that for tablets, the seven-inch form factor introduced by NOOK, then Kobo, Amazon, Apple, and Google, is likely to speed this transition. And with top publishers now reporting that more than 25 percent of their total adult trade sales come from digital products, this is a growth area that the industry can’t afford to miss.

Oddly, 85 percent of respondents said that they were optimistic about the digital transition, but when questions were asked about their own company’s preparedness, they seemed pessimistic. While almost two thirds (64%) agreed that their company “is capable of competing in a digital environment,” only 55 percent said they believed their company’s plan has a chance of succeeding. Both of these figures have dropped 10 percent compared with the 2012 survey.

Even worse, executives seemed to feel that their companies have not adapted well so far, with only 34 percent saying that they felt their business was stronger today because of the growth of digital products.

Following McQuivey’s presentation, a David Nussbaum, chairman and CEO of Digital Book World parent F+W Media, led a panel discussion of publishing executives, including Marcus Leaver, CEO of The Quarto Group, Inc., Karen Lotz, CEO of Candlewick Press, and Gary Gentel, president of Houghton Mifflin Harcourt.

Gentel began by stating that the growing popularity of tablets “forces us to be better at what we do. What I mean by that is that…when someone is using a tablet, they’re one click away from the world. When they’re using a dedicated ereader, they’re immersed in the product.”

Candlewick Press is a children’s book publisher, and as such, can count on parents maintaining engagement when they read ebooks to their kids. But she offered a telling explanation for why many publishers have proceeded with caution during the industry’s transition toward ebooks.

“We were really hesitant to enter into that market when it was simply taking a beautiful physical object, scanning it, and then presenting it in a very inadequate way,” she said. Relating an anecdote about a fortune cookie she had opened during a business lunch, Lotz said “the second mouse gets the cheese. We decided ‘we’re going to be the second mouse, and we’re going to wait until these devices could do justice to these materials.’ In a way, our story is just beginning because of tablets.”

Native apps have become a key driver of sales and user engagement for tablets and smartphones, but during his earlier presentation of the Forrester survey data, McQuivey said that publishing executives may have grown skeptical of the potential that apps have for their industry.

While a substantial majority of publishers—85 percent—said that their company produced apps, they seemed less than enthusiastic about this direction for the business.

“Forty-five percent of them say apps cost too much to produce—roughly the same number that we had last year. But, only 19 percent still believe that apps could change the future of books, and a similar number, about 21 percent, see revenue potential in apps.”

During the panel, Gentel noted that Houghton Mifflin Harcourt had a huge hit with an educational app featuring Curious George, but noted that this was a unique situation and “it’s incumbent on us as the stewards of those types of brands to make sure that we handle them in the best way possible. So we’re not going out and doing a lot of apps around Curious George. We’re not going out and doing a lot of apps, period. But we are looking at the various properties that we have.”

At The Quarto Group, which produces how-to guides, graphic design titles, cookbooks, popular reference, and other types of titles, Leaver said that apps have so far proven to be good tools to engage customers, but not necessarily to generate revenue.

“The numbers are small in terms of making money from them, but they’ve been very good marketing drivers,” he said. “I think what we saw in the numbers and data in 2012 was they are really creating ‘stickiness’ as it were.”