With an estimated 90,000 book titles produced every year in India by almost 19,000 publishers, the Indian publishing industry is growing at an estimated 30 per cent a year. What does this mean for e-readers in the country?
First things first. E-readers are electronic devices that are able to store thousands of books in their bellies but weigh just as much as a 200-page book. They may offer additional functions such as internet connectivity, web browsing and bookstore applications to name a few. Amazon’s Kindle, Barnes and Noble’s Nook and Sony’s E-Reader are among the first off the mark.
In sophisticated e-book markets such as the US and the UK e-readers are on an inspiring growth trajectory with numerous books selling more than a million digital copies, the availability of regular digital bestseller lists and the emergence of new tools directed at authors for creating and distributing e-books.
The US publishing industry and the readers have embraced new reading formats like no other market. The popularity of e-books and applications is reflected by their remarkable growth rates. The total share of e-books in the trade market increased from 0.6 per cent in 2008 to 6.4 per cent in 2010. Dedicated e-readers and multifunctional devices continue to gain popularity while computers lose ground. The availability of e-content, consumer awareness and endorsement, supporting hardware devices and clarity on rights have together given the e-reader market in the US a huge thrust.
The UK is another developed market for e-books though field leaders are academic and professional publishers. Consumer sales of e-books started to take off in the UK after the Amazon Kindle store opened in August 2010 and gained momentum with the arrival of the Apple iPad.
The emerging markets
In emerging markets such as China and Brazil, educational materials are a driving force for digital publishing and reading devices.
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China has defined a goal of “fully embracing digital trends” as a key ambition for its 12th five year plan, which took effect in 2011. The government actively encourages digital publishing in many ways as it aims to increase the revenue contribution of digital publishing from 8 per cent of the publishing revenue to 25 per cent. A-third of the digital publishing revenue is contributed by mobile devices as consumers like to read on the go. A broad choice of reading material, the distribution of content by telecom operators, the increasing use of smartphones and computers is driving the e-content and devices market. Still, e-readers have not done as well as smart-phones and computers/laptops, given that the Chinese consumer is very price-conscious and utility-driven.
The Brazilian e-book market had a head start in 2010 with one bookshop selling 150 titles. As of now, Brazil sells more than 11,000 titles of e-books a year. Much of this success can be attributed to publishing houses and distributors of online content. Yet e-readers are considered expensive and are keeping a large chunk of the buyers away.
The e-book sector in India is still in its infancy because of the scarcity of quality local and regional content. While some of the e-book stores may have over half a million e-books, the titles have been acquired from either international content aggregators or from individual authors/publishers or from smaller publishing houses. It seems digitisation is not the impediment; financial terms, distribution mechanism and copyrights are.
The Indian scenario
The e-reader market in India was born in 2010 with the launch of two indigenous e-readers — Infibeam’s Pi and EC Media’s Wink. Next, Amazon’s Kindle was launched in 2011. Retailers have been reluctant to talk about sales figures for e-readers. Are they too small? Probably. In bringing out a comparison of India with a developed market, it would be significant to note that EC Media’s target to sell 25,000 units in a year was considered ambitious by industry watchers as compared to 5,00,000 units of Kindle sold by Amazon in the US within a year of its launch in 2007.
What are the other factors that are hindering the sales of e-readers in India? Price is a big barrier. Indian consumers are not predisposed to pay Rs 18,000-20,000 for a Kindle. The local brands priced at Rs 8,000-12,000 would count as a good bargain for a couple of thousands less. The price-sensitive Indian consumer is utility driven. When people can do a lot more with smart-phones, tablets, laptops and iPads then why buy e-readers? Also e-books do not offer the physical ‘feel’ of a paperback book and, to some, this seems like a discomfort given their traditional reading habits.
In developed markets e-books cost 20-30 per cent of the price of the print version; whereas in India e-books on an average cost 60-70 per cent of the price of the print version. Some popular titles cost as much as the print version and some titles cost more than the print version.
Publishers in India see e-books as an important source of additional revenue and hence are bullish on the prospects. Many large Indian publishers plan to roll out e-books in 2012. Factors like lower cost of production, low investment in infrastructure, little or no inventory and storage costs as compared with print publishing and the opportunity to reach a global audience economically are urging suppliers to provide e-content.
India has more than 770 million mobile subscribers (65 per cent penetration), 100 million internet users and more than 11 million broadband subscribers. The e-commerce industry is estimated at Rs 520 billion and is growing at 30 per cent year on year. More than 40 per cent of Indian users are likely to purchase books on the internet; the e-book storefronts are ready with numerous online retailers such as infibeam.com, thewinkstore.com, indiaebooks.com etc that are looking to make the most of an emerging opportunity.
It is noteworthy that tablet sales in the metros have increased notably. According to some estimates, around 1.6 lakh tablets were sold in India between October 2010 and June 2011 (three quarters) after their introduction in India in June 2010. This translates to 17,000-18,000 tablets sold per month. The segment is expected to grow rapidly in the next five years.
The way forward
In mature and emerging markets, the popularity and adoption of e-readers have got a push from manufacturers, content developers, content distributors, telecom providers etc — all elements of the value chain that would like to have a share of the revenue pie.
Affordable e-readers with robust infrastructure, elegant design and appealing pre-loaded content could be decisive in enhancing the value proposition of e-readers. The availability of reasonably priced e-books and financial agreements between e-content developers, distributors (device makers/telecom operators/online stores) and other stakeholders will help.
For now, besides gadget freaks, e-readers will woo those who wish to carry their bookshelves with them.
Shweta Gulati is consultant and Suheil Murgai is senior manager, Ipsos Business Consulting