The book bounce

Why families are snapping up printed titles like it’s 1999, and kids publishers are on the hunt for new properties to keep their book business booming.
September 15, 2017

So much for a high-tech takeover. It seemed like eBooks were poised to dominate the publishing industry on the cusp of the 2010s, but a rising tide of print sales is telling another story. Print book sales in the US were up last year and in 2015—and in the two years before that. (NPD Book reports a compound annual growth rate of 2.8% since 2013, with US$674 million in sales for the industry as a whole last year.) Digital book sales, meanwhile, peaked in 2013 at US$242 million and have been on the decline ever since. Last year, the category represented US$179 million of the total market, and hardcover books outperformed eBooks for the first time in five years.

This print-based sales surge is especially strong in children’s publishing. US kids print book sales have grown faster than the overall print book market, with a compound annual growth rate of 5.3% since 2013. Kristen McLean, executive director of business development for NPD Book, says parents have a strong bias towards print when it comes to their kids. (NPD Book was formed earlier this year when The NPD Group acquired Nielsen’s US market information and research services for the book industry in January.)

“Parents have very strong feelings about unplugging from technology,” says McLean. “When you ask them, parents profess to have a strong preference for print for their kids, I think because they have a certain amount of guilt over the technology in their kids’ lives.”

“Print is definitely up in the children’s market, pretty consistently,” she adds. “The US book market is very saturated. It’s a mature market, so we measure growth in most categories in one or two percentage points, not 10 percentage points. A 5.3% growth rate is pretty good for our market.”

And while digital sales are declining, McLean points out that eBooks never took off in the kids space the way they did in adult publishing.

“With digital, in the adult part of the market, it penetrated up to about 50% in fiction,” she says. “In the kids market, it never really got above 12%, and it has eroded from there.”

Digital decline

There are a number of reasons why eBooks never gained real traction in the kids space, according to Valerie Garfield, VP and publisher for novelty and licensed publishing at Simon & Schuster in New York. One factor is that the illustrations associated with formats designed for young readers—including novelty, board and beginner books—don’t translate well to digital.

“Another piece of the equation, I think, is that tablets and devices are still expensive,” Garfield says. “In most cases, you’re not going to give your young child a tablet to read on when they can drop it and crack the display or break it. Price is a very strong barrier to not having eBooks infiltrate.”

Additionally, Garfield says many parents are reluctant to replace classic bedtime stories with their digital counterparts. “Reading to your child is really irreplaceable,” she says. “There have been many campaigns around this, particularly in the US, and word is getting out that you do need to read to your child in order to instill and foster a love of reading. It’s about building vocabulary skills, and speech, and all the things that go along with that.”

But this bump in print sales doesn’t mean publishers have gone wild in snapping up manuscripts and licenses to turn into books. “I don’t think there’s any different decision-making based on how books have been selling,” says Garfield on choosing properties for the licensed book biz. “Nothing is a guaranteed home run,” she adds. “There are always risks involved when you’re taking on a license. You never know if it will go up and down quickly, if it will catch on fire, or what’s going on with other consumer products components that might affect those sales.”

Rather than focusing on sales, Garfield says she looks to the market as a whole and examines what is succeeding and where there might be holes that a particular license could fill. She notes Entertainment One’s PJ Masks is a particularly strong property for Simon & Schuster right now, as are its stablemate Peppa Pig and Spin Master’s PAW Patrol.

Licensing lowdown

Print sales have been rising steadily since 2013, but the competition is as fierce as ever, and according to Garfield, licensing in the world of publishing is a different animal entirely. “It’s a really tight, tough, competitive market,” she says.

“Even though we’ve had nice book sales, that doesn’t change the licensing landscape. We’re all competing for space and we’re competing for, in many cases, decreased space at retail. There is a disconnect between what is working or what does have strong sales, and what’s going to happen six to 12 months from now when you get the books out on shelves,” Garfield contends. “The market changes radically, it changes quickly, and it’s all about who, potentially, could be eating your lunch. Licensed publishing always runs by its own set of rules.”

In an effort to better track the intricacies of licensed publishing, NPD Book is currently coding its database for licensing, with plans to bow a licensed publishing tracker in 2018.

“We do see a pretty strong correlation between multiplatform IPs and book sales, so if you have a cross-platform tie-in, it really does help,” says McLean. “An example would be the Pokémon handbooks, which have been going gangbusters since Pokémon GO came out. It’s like a numbers game; there are 28 million books in print in the US, so having a strong multiplatform license definitely helps with brand awareness.”

For Julia Posen, EVP and commercial director at Walker Books Group in London, the focus has been on building licensing programs around classic book properties in an effort to capitalize on strong book sales and win over new readers.

“Every few years, you’re winning over a whole new audience,” Posen says. “We’ve been really selective and chosen books that we felt lent themselves to licensing particularly well. The most recent for us is our classic book We’re Going on a Bear Hunt.”

And We’re Going on a Bear Hunt—the half-hour animated co-pro from Walker Productions and Lupus Films—was commissioning broadcaster Channel 4′s most-watched program in 2016. After its massive broadcast success during the holiday season, home entertainment partner Universal launched the DVD in February. And a number of licensees have come on board since, including Aurora (plush), Channel 4 Gaming (games), Paul Dennicci (apparel), Cooneen By Design (apparel) and Portico Designs (stationery).

Additionally, Walker Books released a number of new books for older children inspired by the special that pick up on themes of exploration and appreciating nature.

“As soon as people knew the consumer products program was based on this beautiful, classic book, the doors just opened,” says Posen. “I think that’s what classic children’s publishing does; you can prove that you already have this wonderful fan base that you’ve nurtured and cultivated for many years through publishing. I think [licensors]feel like the risk factor is lessened somewhat by associating with a book that has proven itself in retail via bookshelves.”

Though the business of bookshelves has been good for several years, Posen agrees that the competition is as fierce as ever. “Children’s properties are doing really well, but there are a lot of people competing for a few spots,” she says. “It’s a really exciting time to be in the children’s space. Change makes for difficult times, but also interesting ones.”

Tech 2.0

And the changes will only keep coming. Posen, for her part, is keeping her eye on live performances. She says there has been significant interest in recent months—particularly internationally—in turning book properties into live shows. And while classic properties with multi-generational appeal are usually a safe bet, Posen says there has also been interest in lesser-known IPs with striking illustrations.

“That is something I think is really interesting,” she says. “And from a brand ownership point of view, it’s something people seem to feel confident in and comfortable with as a route to market.”

Confidence in comics and graphic novels is also at an all-time high. According to NPD Book, the kids comics and graphic novels segment grew by 24% in 2016, to the tune of US$4.87 million. The segment has grown at a compound annual rate of 25% since 2013, including juvenile fiction, juvenile non-fiction and young adult formats.

“We expect continued, really strong growth in that category moving forward,” McLean says. “I don’t know that we’ll see 24% growth again—that rate is pretty crazy—but I wouldn’t be surprised to see another 10% in that category this year.”

According to McLean, early-education formats—board books, in particular—were also strong sellers in 2016 (up 7%), along with STEM and science books. “That might have been driven by educational environments in the past, but it’s really driven by YouTube right now,” she says. “Things like the DIY slime phenomenon, coding and gaming are all contributing to that growth.”

So, what about technology and book formats moving forward? eBooks may not have taken off in the kids space, but McLean isn’t ruling out audio books.
“I’m watching audio very closely. I think that there are pretty profound shifts happening in consumption behavior going towards audio, and in a really interesting way, I think audio could turn out to be a much better native digital format for publishing than eBooks.”

McLean says audio book sales have been rising in recent years, and while audio technology in the kids space is still in its infancy, she believes in-home devices like Google Home and Amazon Echo are making the sector an important area to watch.

Garfield is excited about emerging technologies and what they might mean for the publishing industry, though she believes technology should enhance without distracting.

“I’m a purist,” Garfield says. “I strongly believe that there will always be a market for strong stories and characters in book form. That being said, of course we are keeping our eye on technology and looking to see what’s developing. But a lot of the technology that I’ve seen is taking you too far off the book, turning concepts into a game or a toy, and I’m not quite certain that’s entirely where I want to go. The best ideas I’ve seen are ones that enhance the book, but don’t take away from the true reading experience.”

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