Future in words

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Emerging markets China
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Future Plc

• Three wholly owned businesses UK, USA and France
• Over 1,400 employees worldwide
• Produce over 100 magazines, 80 websites and 17
  live events
• Market leader in over 15 various market sectors
• No.2 special-interest publisher on UK newsstand
• Sell 5.4 million magazines every month
• Our websites reach over 7 million unique users a
  month

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Key Facts about Future

• Worlds No 1 games magazine publisher
• Worlds No 1 guitar magazine publisher
• Europes number one for music-making magazines
• Official relationship with Microsoft
• Official relationship with Sony
• Official relationship with Nintendo

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Future Brand
Narrow but deep focus Future has built its high
quality properties, clearly targeted at
specialist sectors where readers usually require
a narrow range of information which is deep in
content and authority
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International

• Global community has become a reality spurred by
  technological and digital advances
• Increasingly enables ideas, brands and
  information to traverse international boundaries
• Media has acted as catalyst for change through
  global TV output and accelerated through the
  advent of web based technology
• Magazine publishers are increasingly focusing on
  international expansion as home markets mature
  and competition from publishers and new
  platforms increases.

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Attitude to Risk
Start-up Subsidiary

• Start-up / Subsidiary
• Acquisition
• Joint Venture
• Licensing
• Syndication
• Export

Acquisition
profitability
Joint venture
low high
Licensing
Syndication
Export
low high
risk
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Export business

• Future exports more monthly magazines by value
  than any other UK publisher
• 4 million copies sold in 73 countries annually
• 13 million revenue freight every year
• 85 growth since 2002
• 5 growth budgeted for 2008

8
Licensing business

• The granting of rights to use a trademarked
  magazine brand and/or its content in another
  territory, and/or another language for specified
  time and for a specified fee
• 33 countries, 133 local editions, 65 licensing
  partners and 55 titles licensed
• Future is the UKs largest licensor of magazine
  content
• With universal subject matter and user-friendly
  layouts titles are easily transferable

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What makes licenses successful

• Relatively low risk way to generate incremental
  revenue
• Quicker launch opportunities and can be
  profitable immediately
• Selling the content thats already been produced
• Able to take existing strong brands and launch
  them utilising local knowledge and expertise
• Building relationships with like-minded partners
• Strengthening the brand developing prestige of
  an international network - helps commercially and
  editorially

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The Relationship

• The single most important factor !
• Must share the same goals , vision and values,
  personally and corporately
• Understanding the brand and concept
• Partnership of equals
• Trust and transparency is key

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China
Some forward-thinking US and European (Western)
business leaders are already embracing the NEW
China Opportunity because its their answer to
profits and basic survival in this competitive
price-driven, global marketplace and the time
to do this is NOW. John Casoline Global
Business Expert
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Chinas Appeal

• Population of 1,321,851,888 (July 2007 est.)
• Second-largest economy in the world after the US
• Second-largest growth of any world economy at
  9.2 (after Eq Guinea)
• Set targets of 45 increase in GDP by 2010
• Most of the big international publishing players
  are already present.
• IDG has been present for 20 years (China is the
  2nd largest source of revenues after USA).
  Hearst, Hachette Filipacchi, GruenerJahr, Conde
  Nast, McGraw, Ziff Davis, Burda, Haymarket, EMAP,
  BBC and Primedia

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Chinas Appeal cont

• By the end of 2004 Chinas had 1276 newsstand
  magazines versus 5340 in US and 2,220 in Germany
  (Source China magazine Industry Report China
  Knowledge Press)
• Mainland China is now the third-biggest
  advertising market in the world after the US and
  Japan, posting a 21 Y-o-Y growth to nearly 316
  billion Yuan (37 billion) in 2006 (Source FIPP
  2007)
• More to come - advertising in Chinese magazines
  is under-developed. It accounted for 1.6 of the
  countries total ad spend in 2004 Europe
  averages 24, the US 9 and Asia 8.5 (Source
  China magazine Industry Report China Knowledge
  Press)

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Whats the catch?

• Only 75 million people able to afford high
  quality, magazines at present
• Beijing and Shanghai remain the major magazine
  markets for publishers. Weak distribution
  hinders growth in other major cities
• The most widely circulated magazines are still
  domestic titles with no foreign involvement.
• Covering current affairs, social and family
  issues and real life stories, printed on light
  paper in black and white, and sold at RMB 3-RMB 5
  (about 0.37- 0.62)

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Whats the catch?

• The Chinese magazine industry is strictly
  supervised and monopolized by the government, it
  is responsible for the content of magazines and
  acts as the censor
• The state issues licenses to foreign publishers
  and without that license any publication cannot
  be brought into the market.
• Politics, religion and sex are still difficult
  editorial subjects in China
• Licensed publications sometimes carry a title
  that is completely different from the original
  name.

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Whats the catch?

• Market is already saturated in many sectors -the
  womens sector is crowded and Chinese men can
  already choose from Mens Health, Esquire, FHM,
  T3, Stuff and Maxim
• Circulation makes up over 90 of the typical
  Chinese magazines profit
• Often inadequate protection of intellectual
  property rights
• Chinese publishers are developing brand
  extensions to meet the different tastes of their
  readers. Bosom Friend, Duzhe, Family and Rayli
  have a total of 32 affiliated magazine titles

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Our experience Stage 1

• Adopted a cautious approach, based on attitude to
  risk
• Make the right contacts. Future forged good
  arrangements with a Hong Kong based publishing
  company that has contacts in China. This
  arrangement offers us
• reliability
• prompt payment
• trademark protection (agreements between Hong
  Kong and the UK)

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Going forward- Stage 2

• China will continue to develop at break neck
  speed
• As the market becomes more developed and the mass
  market titles reach saturation, opportunities
  will emerge for more specialist interest
  publications
• More contact with mainland Chinese publishers
• Reasonable , not huge growth expected

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The Opportunity in perspective
Russia 12 Licenses Brazil 5 India 3
China currently 3 licenses
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Summary

• China undoubtedly presents publishers with a huge
  opportunity
• But
• Look beyond the 1.3 billion population and take
  in to account, mass poverty, 8 different dialects
  and a poor distribution network
• Strict control by the government can be
  prohibitive
• Do your research and get involved with the right
  partner