Future as a publishing empire is crumbling.
And after posting a loss of more than £30m for the first half of the year, it is taking drastic action to rescue its business. It is selling its bike, sports and craft titles for £24m, it plans to cut 170 employees from its roster in the UK, and for us in games, it is proposing to cut many of its most iconic websites. The most surprising is its plans to end CVG, a brand that is now 33 years-old and is considered one of the foremost websites for games news.
But there are also plans to close Edge Online, plus the websites for all of the Official magazines – PlayStation, Xbox and Nintendo. The idea is to create one ‘super-website’ under the Gamesradar name, which is a bigger games media brand in the US, if not quite in the UK. Meanwhile, its declining print business will undergo changes, too, with all games magazines moving from London to its Bath HQ.
“Once the consultation period is over, Future will be a stronger and more focussed business,” Future’s UK MD Nial Ferguson tells MCV.
“This is not a tactical cost-cutting process. It’s a strategic transformation to ensure that we are delivering to our growing audience and providing effective solutions for our commercial partners.
“Future’s strategy has always been to connect our highly engaged audience to world-class content wherever our consumers want it – online, on mobile, in print and beyond.
“We are a leader in tablet content sales, have over 58m people consuming our online offering every month and we continue to evolve our content strategy to suit our consumers’ needs.”
IS DIGITAL BROKEN?
Future boss Zillah Byng-Maddick told staff in an email last month that Future’s business model was not working hard enough. The company is struggling to replicate its former print success in the same way across digital platforms. It has invested a lot of time and money in launching websites, iPad magazines and the like, and it is attracting audiences. Yet advertisers remain wary, and the number of ‘eyeballs’ that Future is attracting is not translating into income.
“Big traffic numbers can be important and could well signal success, but they don’t paint the full picture,” says Rupert Loman, CEO of Gamer Network which operates Eurogamer, amongst others.
“Engagement is hugely important - things like trust, editorial credibility and community all play a part. And when talking about advertising, creativity and the environment for marketing messages can often be overlooked when just focusing on a headline number.”
"Once the consultation period is over Future will be stronger a more focussed business."
Nial Ferguson, Future
Future actually agrees with this. Ferguson says: “Our commercial partners have a range of needs. From building awareness of a new console launch, to driving pre-orders of a new game, collecting insight, driving social media followers or creating greater consumer engagement. We have strong relationships with our commercial partners, who know how important it is to be able to connect with Future’s highly engaged audience.”
The challenge when creating a ‘highly engaged audience’ is how much that costs. CVG and its sister sites have large editorial teams, several layers of management and plenty of investment. The result has been a high quality product, but not necessarily a profitable one.
“The big killer for many companies in digital is high operating costs,” says Damian Butt, who runs Future rival Imagine Publishing.
“Some have become bloated, with endless rafts of upper and middle management who don’t actually do anything except attend conferences, sit on panels, and attend awards ceremonies whilst the core business implodes.
“Creating digital magazines that look impressive for the judging panels of a seemingly endless series of digital awards galas seems to be the priority.
“The key problem facing the digital games media is that the growth we all expected to mirror tablet sales really hasn’t happened yet. This coupled with a serious drought in digital magazine advertising is causing widespread pain and panic in some quarters. Not disastrous if you keep costs tight, focus on key brands, and continue to innovate. But if you publicly bet the company on digital, claim print is dead, and launch lots of ill-conceived digital-only titles that go on to fail, things are probably not looking so rosy right now.”
Butt’s comments are harsh, but they appear in-line with Byng-Maddick’s own thinking. She acknowledges that Future has become an overly complex business that has been distracted by low margin opportunities.
“There is a lack of standardised processes, leading to a lack of focus. This has meant that some activities, while generating revenue, are often low margin. Hence the conclusion that the company should focus on areas where we see highest potential,” she said in the firm’s latest financial report.
GAMES MEDIA IN CRISIS?
But what does this all say about the full state of the games media? Is there a broader crisis brewing behind the scenes at these ‘old-guard’ publishing businesses?
“The games media is in a period of transition, which is as you’d expect given the changes that are going on in the wider world,” says Loman.
“Over the past few years we’ve seen the rise of mobile, social media and video which have changed how people consume media. The current transition is as significant as the move from print to online was in the 2000s. It will bring problems for some, and opportunities for others.”
He adds: “Success will come to those who are focused on doing specific things really well. Events such as EGX have become a big part of our business. Those who have a distinct offering, and can monetise it effectively, can still do really well.”
"Some activities, while generating revenue, are often low margin. Hence the conclusion that the company should focus on areas where we see highest potential."
Zillah Byng-Maddick, Future
Butt adds: “The games industry no longer supports or values games magazines, and yet they are part of a heritage stretching back to 1981 with the original CVG. It would be great to see digital spend diverted back to gaming magazines so that we can continue to provide gamers with quality content.”
For all the negativity surrounding Future’s results and the tough decisions it is making, Byng-Maddick does offer some optimism. She talks about focusing on Future’s strengths to better position the business. But what exactly does she mean by ‘strengths’?
“It’s our world-class content, and the experts who produce it,” concludes Ferguson.
“We have a highly engaged audience that trusts us and our brands. We have to align our content strategy with our consumers’ needs.”
And that is the biggest challenge around Future’s restructure. It does produce award-winning products from hugely talented journalists. So it must be careful that in its rush to save money it doesn’t lose the talent that has - so far - made the company worth saving.
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