BONNIER: DIGITALIZING THE MEDIA BUSINESS

Conlon Cash, Brooke McCarter, Sundeep Shamanur, and Cole Welch

OUTLINEIssue IdentificationSituation Analysis

Internal External

AlternativesRecommended StrategyImplementationRisks and Contingencies

ISSUE IDENTIFICATION

How can Bonnier achieve an uptake in readers to offset the declining sales of traditional media?

Would introducing an innovative product solve this issue?

Goal: Increase Sales

“[R&D’s] task is to identify opportunities to develop and initiate new projects in a fast-changing media world.”

Issue

CONSUMER CULTURE

Traditional Media

Digital Media ???

Analysis

INTERNAL ANALYSIS

• Innovation• Large variety of magazines

Strengths

• Decline in traditional magazine sales• Decrease in profit from 2009 – 2010• Digital applications only brought in 2% of revenues in 2011

Weaknesses

Analysis

EXTERNAL ANALYSIS

• Android and other markets• Digital media culture• Technological advances

Opportunties

• Volatile consumer culture

Threats

Analysis

KEY SUCCESS FACTORS

Innovation

Digital PlatformDiversity

Analysis

FIVE FORCES MODEL

CompetitionHigh

SubstitutesHigh

BuyersHigh

New EntrantsMedium

SuppliersLow

Analysis

ALTERNATIVE 1: SOCIAL MEDIA SERVICE

Pro • Keeps up with the trend in “pro-sumer” culture• Matches company culture of innovation

Con • High risk

Create a micro blogging app that allows users to keep up to date on topics that they are interested in that

are exclusive to that app.

Alternatives

ALTERNATIVE 2: CROSS PROMOTION

Pro • Increase in traditional sales• Increases awareness of online

Con • Hard to know if consumers will purchase magazine given the decline in sales

Entice consumers to purchase print magazines by offering exclusive interactive content online or using

the app only if the consumer purchases it.

Alternatives

BLOG APP CROSS PROMOTION

Brand Awareness

Additional Revenue Sources

New Product

Adresses Consumer Preferences

Dynamic

Adds Value for Customer

Increases Tradtional Subscription

QUALITATIVE ALTERNATIVE ANALYSIS

Alternatives

QUANTITATIVE ALTERNATIVE ANALYSIS

Weight Alt 1 Alt 2

Feasibility 25% 3 5

Innovation 25% 5 2

Timeliness 15% 3 4

Risk 15% 3 4

Digital Integration 20% 5 3

Total 100% 3.9 3.35

Scale of 1-5; 1 = Worst; 5 = Best

Alternatives

RECOMMENDED STRATEGY

It is recommended that the R&D Department to develop the microblogging app that targets digitally conscious consumers and allows these consumers to tailor the content to their preferences.

Recommendation

PROJECT BLOG+

Addesses Consumer CultureMicrobloggingSocial MediaDigital Integration

Supplies Information Variety

Implementation

PERSONAL PROFESSIONAL

Twitter Full Website Articles

Project Blog+

Project Blog+ is a mix between personal information and a long, professional format.Implementation

PROPOSED PRICING STRUCTURE

Free VersionApp Price:

Free

Revenue Generation:Advertising

Paid VersionApp Price:

$7.99/month $84.99/year

Implementation

Sports

Movies

News

Health

Music

Home Improvement

Movies

Music

Video Games

Politics

Health & Fitness

Cars

Fashion

Gadgets

Etc.

FREE VERSION

PAID VERSION

Implementation

IMPLEMENTATION

Short Term (0-6 Months)• Build infrasctructure to deliver the content• Network with potential writers

Medium Term (6-12 Months)• Test market in Sweden• Review the data

Long Term (12+ Months)• Full roll out on Apple and Android markets

Implementation

OUTCOME

Issue: How can Bonnier achieve an uptake in readers to offset the declining sales of traditional media?Adresses Key Sucess Factors:

InnovativeDigitalVariety

Implementation

FINANCIAL INCONSISTENCIES

The parent company’s profit is not currently tied to the success of the R&D department

Why? − Digital apps and digital subscriptions only make up a total

of 3% of revenues− The Parent Company brings in the majority of its inco,e

from investment in subsidiaries

What else is going on?Subscriptions declined from 2009 to 2010, having a substantial impact of on parent company profit

Implementation

PROFIT TRENDS

2009 2010 2011 2012 2013 2014

-500

0

500

1000

1500

Profit (loss) for GroupProfit (loss) for Parent

Implementation

RISKS & CONTINGENCIES

Risks:Writers don’t agree to the ideaSuffcient growth is not obtainedThe idea never leaves the development stagePoor expectation of consumer culture shift

Contingencies:Infrastructure for Blog+ can be licensed in the same manner as Mag+Shift resources to cross promotional strategy

Risks and Contingencies

WHEN TO EXIT?

Tests:FitPerformanceCompetitive Advantage

Risks and Contingencies

QUESTION AND ANSWER SESSION

QUOTE

“The world of passive consumers was turning into a new world of connected “pro-sumers”

where users actively tailored content and created their own content.”

QUOTE

“Imagine this: the best minds in the industry have spent 15 years in addressing this issue, and

they haven’t come up with anything. You will not know more in February than you know now,

so you might as well start doing something.”- Jonas Bonnier

QUOTE

“Their task is to identify opportunities to develop and initiate new projects in a fast-changing

media world.”-Describing the RD department