The India magazines opportunity

While the world has been focusing on Olympic Beijing this summer, the other Asian superpower, India, continues to develop as one of the world’s most interesting magazine markets. Without the media ownership restrictions and censorship which make China such a challenging market in which to operate, publishing is one of the markets in which India looks considerably more attractive than its giant rival to the east.

The world’s second most populous country, with just over one billion people, turned onto its current course of relative openness and faster growth in 1991. Since then, many of the government controls and restrictions which had held back growth in the past have been dismantled and Indians themselves have developed a powerful confidence that now is India’s time in the sun. Purchases of important businesses around the world by Indian companies (including a few in the publishing field) have persuaded people that there is nothing to stop them being competitive in today’s world markets.

This may be a slightly optimistic view. A creaking infrastructure and low literacy levels among India’s poor (fewer than 50% of Indian women can read and write) will continue to put a dampener on India’s growth. But, it is clear that things have changed hugely and permanently in the past 15 years, and largely for the better.

A growing industry

As the economy booms, so has magazine publishing. This is a very strong industry in India. A cover story in the Brand Reporter last year claimed that there is one major new title being launched every month. The highly literate, educated middle class is an avid consumer of print media; this is also one of the only places on earth where the newspaper market still booms and industry reports are full of new launches.

The industry looks relatively young by the standards of its western competitors, still focusing on growth and with many new launches and new groups emerging. There is an active mergers and acquisitions market, despite some rather ambitious views on company values and new publishers emerge on a regular basis. But the industry is maturing. It is very clear who the key players are and there are now quite a few of them. Much higher levels of professionalism are emerging, although audits among magazine publishers remain the exception rather than the rule.

One key feature of the market remains relatively low pricing, particularly for advertising in all but the most prestigious magazines. In many market sectors, page prices are the equivalent of just a few hundred US dollars and discounting remains rife. We have been told that a 40% discount off the rate card is regarded as the normal ‘starting point’ for negotiations by many ad salesman.

Cover prices also remain generally low. A cover price of Rs15 – 20 (US$0.35 - 0.46) is typical for most general interest and mass market magazines. Annual subscriptions are as low as Rs750 (US$17.50) a year for a weekly. This being said, a small number of high-end, glossy consumer magazines have successfully positioned themselves with cover prices in the Rs100+ (US$2) range. These are typically specialist or luxury magazines and this price positioning would not allow for a mass marketing positioning.

This is a market in which the print product has generally not yet been over-shadowed by online substitutes. Despite all the talk of hi-tech India and outsourcing to Bangalore, internet penetration levels in the country actually remain relatively low: according to Internet World Stats (www.internetworldstats.com), the latest figure for India is 60 million users, representing a penetration level of just 5.2%. This compares to China’s 253 million users, 19% of that country’s population. Of course, the educated elites are heavily represented in that 5.2% and in some sectors (eg. IT) online usage is picking up very quickly.

Foreign companies in the market

Until the middle of 2002, foreign ownership of media in India was basically forbidden. Since then, restrictions have been substantially reduced if not eliminated and almost all of the major players have established some type of a presence in the country. Foreign companies are integrating themselves into the market but certainly not taking over. Full foreign ownership of non-news publications is now permitted and firms such as IDG, Haymarket and CMP have established their own, wholly-owned presence in India. Most international publishers have, though, still chosen to partner in one way or another with the key Indian companies and news publications are still restricted to 26% foreign ownership.

In order to get a clear understanding of the market, it is worth taking a quick tour of just who those key players are. Some names will be familiar to anybody who has ever taken even a brief look at the Indian market, whereas others are newer and may be less familiar. The three giants of the industry in India are the India Today Group (www.indiatodaygroup.com), Outlook (www.outlookindia.com) and the Times of India / BBC JV World Wide Media.

India Today’s portfolio includes India Today, Prevention, Money Today, Men’s Health, Design Today, Business Today, Good Housekeeping, Travel Plus, Reader’s Digest, Golf Digest India, Harvard Business Review, Cosmopolitan, Scientific American India and Spice. Most of the Indian editions of foreign magazines are produced under license but, it has recently agreed to form a joint venture with Axel Springer to launch an Indian edition of Auto Bild.

Outlook magazine was launched in 1995 and has since established itself as a strong player. Other group titles include Outlook Money, Outlook Traveller and the Hindi language Outlook Saptahik. It has not pursued international alliances as aggressively as some of the other publishers but recently announced that it would work with Bonnier to launch an Indian edition of Popular Science.

One of the first fruits of the liberalisation of foreign media ownership rules was the formation of the World Wide Media joint venture between the BBC and India’s most powerful English language newspaper house, Bennett Coleman, the publisher of the Times of India. The portfolio includes the popular women’s magazine Femina, the leading cinema magazine Filmfare as well as Top Gear India and the Indian edition of the celebrity gossip title Hello!.

Other companies that are emerging as interesting players include the Images Group, whose own IMAGES Business of Fashion, IMAGES Retail (English & Hindi), IMAGES Retail Middle East, and GO INDIA titles are supplemented by Indian editions of Progressive Grocer, Sportswear International, Shopping Centre News, FNL and M. The last of these recently switched up to monthly frequency.

Paprika Media is Time Out’s licensee in India with editions in Mumbai, Delhi and Bangalore (recently re-named Bengaluru by politically-correct local officials). Next Gen Publishing (in which Emap bought a 40% stake for Rs40 crores – GB£5m) is launching an Indian edition of Mother & Baby from the UK and already publishes Bike, Car, Commercial Vehicle, Computeractive, Smart Photography, The Ideal Home & Garden, FHM India, and Forbes Yellow Pages (linked to its association with India’s Forbes Group conglomerate rather than any connection with the US business magazine of the same name).

Business magazines

Three English titles dominate the business magazine scene in India: ABP’s weekly BusinessWorld leads the pack, followed by the fortnightly Business Today from the India Today group and the independent Business India. All have circulations hovering a little above or below 100,000.

Speciality B2B media is dominated by two groups, both listed on the stock market: Cybermedia and Infomedia. Pradeep Gupta’s Cybermedia is a technology publisher, an Indian version of IDG with which it partnered in the 1980s. It is a highly respected company which recently started working with MIT’s Technology Review magazine and its EmTech conferences brand. Its revenues for 2006/07 were US$22.5 million.

Infomedia started life as the printing house of the Tata empire, moved into printing Yellow Pages and was spun off into separate ownership by ICICI Bank in the late 1990s. A stock-market listing followed and the company was recently acquired from the bank by the Network 18 Group, one of India’s most interesting emerging media conglomerates with TV, online and publishing interests. Its international partners include Reed Business, with whom it has a 49:51 joint venture, and a cross border advertising agreement with Ringier.

Operational issues

Despite its huge growth and liberalisation in recent years, India remains a challenging market in which to do business. This is, in part, due to pricing. Other issues which focus the mind of publishers operating there include distribution. Outside the major metropolitan areas (Mumbai, Delhi, Calcutta, Bangalore, Hyderabad and Chennai), achieving cost-effective distribution in the second tier cities and beyond is challenging. Postal distribution is reasonable but sluggish. Some speciality publishers have promoted online circulation into those secondary areas although this strategy is hampered by the fact that those also tend to be areas where internet connections are patchy and slow.

Publishers also need to consider the issue of language. While English remains very much the language of the business and educated elites, those wishing to reach deeper into the mass market need to consider the twenty plus major language groups which exist around the country. There has been a good deal of development in this area in the past few years, particularly among newspaper publishers, but this local language market remains very difficult for foreign publishers to tap.

There are a number of resources which any publisher looking to move into the Indian market will do well to pursue, including an association, some specialist consultants and media. The Association of Indian Magazines (www.aim.org.in) was formed relatively recently in 2003 to represent the interests of the booming periodicals business and represents a good starting point. Its president is currently Outlook’s Maheshwer Peri with Cybermedia’s Pradeep Gupta as vice president. Its second Indian Magazine Congress is scheduled for late September this year in Mumbai.