Printing Services Industry Absorbed by Printers & Online Media
According to the IBISWorld updated report on the Printing Services industry, the industry has been hard-pressed during the past five years due to waning demand for printing and the adverse effects of the recession. Industry analyst Jeremy Edwards notes that “…this contraction occurred… (due to) competition from online media, which reduced print advertising expenditure…”
As a result of downstream declines, revenue is expected to fall at an average annual rate of 3.2% to $4.4 billion during the five years to 2013. Nevertheless, the modest economic recovery has fueled slow growth in demand for industry services, leading to an anticipated 1.2% revenue increase during 2013.
Advancements in desktop publishing have enabled many former industry customers to perform prepress services in-house. Consequently the number of industry operators steadily has declined during the past five years, contracting at an annualized rate of 2.9% to an estimated 2,011 companies in 2013.
“To counter this rising external competition, printing companies are expanding service offerings to include a greater array of prepress and postpress services,” says Edwards. “Also in response to competition, the price of prepress services dropped during the past five years, curtailing profitability.” From 2008 to 2013, average industry profit, measured as earnings before interest and taxes, has declined from 4.7% to about 2.6%.
The Printing Services industry has a very low level of market share concentration, and is highly fragmented; most companies have just one facility and employ fewer than 17 employees. Industry operators typically locate close to printers and publishers, in order to generate a steady stream of demand for both prepress and postpress work. Furthermore, because fast turnaround time is of the utmost importance, printing service companies typically locate nearby their clients to limit both delivery time and transportation costs.
While improving economic conditions will boost demand for magazines and books, the continued transition to the internet will limit industry gains during the next five years. The Newspaper Publishing industry is expected to continue declining, says the report, while magazine publishing will experience only marginal growth. Furthermore, e-book sales are projected to rise rapidly during the next five years. With commercial printers increasingly offering prepress services, the Printing Services industry will be in a bind.
For more information, visit IBISWorld in the US industry report page here.