Hachette buys mobile game company Neon Play

24 June 2016

From The Bookseller:

Hachette has bought mobile games development studios Neon Play in a “substantial” acquisition. Hachette c.e.o. Tim Hely Hutchinson has said the acquisition “could be one of several” for the company in the app space.

Neon Play was founded by co-owners Oli Christie and Mark Allen in Cirencester in 2010 and to date has created over 30 games, including Paper Glider, Flick Football and Panic Traffic London, attracting over 60m downloads.

The studio, which has won 20 business awards including the Queen’s Award for Innovation, will be tasked with “creating, developing and marketing new mobile games” as a standalone business under the Hachette UK umbrella.

Although terms of the acquisition were not disclosed, Hely Hutchinson said it was a “substantial acquisition designed to lead to substantial revenues”, and was also a “serious first step” for Hachette in a bid to make its business “more digital”.

Referring to the mobile gaming industry as “complementary” to the book industry, Hely Hutchinson anticipates that trade and educational publishers will become “more like 50% digital” within the next five to 10 years. He told The Bookseller mobile gaming is “part of the future of the book industry”, with games the biggest and fastest growing part of the app market, while e-books, currently in decline, are “so similar to print books … they barely count as digital objects”.

. . . .

He added: “It’s something where we are very much on the front foot. E-book sales are not declining because people don’t like digital things. They are declining because there is less discounting in the market. So that is the main reason why e-book sales are lower this year. In fact e-books are so similar to print books that they barely count as digital objects. What people are really looking for with the digital world is more interactivity. So communicating with each other on social networks and playing games, you’re not just looking at something, you’re directly involved. And that’s where we want to be.”

. . . .

Hely Hutchinson (left) said that conversations with Christie and Allen had shown him their efforts with apps to date were “somewhat amateurish”.

“They know infinitely more than we do about the app market and how to make an app work, and I think the skills and knowledge they have at Neon Play will help us, for example with a cookery book app or an educational app that actually has nothing to do with games, so I see the acquisition as taking us several steps forward in various parallel relevant directions,” he said.

Hachette has already seen success in the games market with New Star Soccer in May, a game and a book all in one, that was produced in partnership with game developers New Star Games and Insight Studios, and contributed to by award-winning children’s authors The2Steves (Steve Barlow and Steve Skidmore). It hit 35,000 paid downloads in its first week and charted in Apple’s top 10 apps.

. . . .

Hely Hutchinson said the mobile game market “is not for all books,” because “they have to be big enough – have a big enough market – to justify the potential investment, which is quite large.”

Discussions with authors and agents whose books are candidates for gamification would start “from scratch,” Hely Hutchinson said. “Even if we happen to have a very broadly worded contract we would never go to authors and agents ‘we’ve got these rights, we’re going to exploit them’. We would always want to go to the author and agent and discuss the whole thing with them whether the games dimension is the sort of thing they want to do and we would start the terms discussion from scratch.

. . . .

“We see ourselves as having a role of taking, sensitively, creative people’s work to market and turning it into money – income – for creative people. It doesn’t mean we at Hachette can do everything, we are not of the scale to be producing Hollywood-style movies, but there are some things we can do where the investment level is affordable, which will widen our offer to our traditional author base and also give us potential new products where we can gain a very good understanding and do the job properly.”

Link to the rest at The Bookseller and thanks to SFR for the tip.

PG is not familiar with the mobile gaming world, but he tried to imagine what Hachette could bring to a company that makes games. He couldn’t come up with anything but money.

Hachette UK first quarter sales down 5.2%

17 May 2016

From The Bookseller:

Hachette UK sales were down by 5.2% in the first quarter, due to lower e-book sales.

Digital sales have been hurt by the “negative comparison effects” following the introduction of the new agency agreement in July 2015.

Tim Hely Hutchinson, c.e.o of Hachette UK, said digital sales would “probably give rise to negative year-on-year comparisons for at least another quarter”.

He added: “Digital sales were on budget but, in line with the rest of the industry, are below sales for the same time last year.”

Hachette UK parent company Lagardère reported its first quarter sales for the publishing division were down 2.1% like-for-like and totalled €415m (£328.19m), but cautioned that the first quarter traditionally makes a lower contribution to the year as a whole.

Sales in its French division were down 2.2%, while US sales were down 10.3%. The Spanish/Latin America unit was up 31.2% by comparison, thanks to a “one-off export operation to Latin America”.

Link to the rest at The Bookseller

Hachette Reaches New Deal With Perseus Books

1 April 2016

From The New York Times:

The Hachette Book Group has reached an agreement to buy the Perseus Books Group’s publishing business, 18 months after its previous attempt to acquire the company fell through.

The new agreement, which was announced on Tuesday, comes six months after Perseus, a large independent publisher, began looking for a buyer again after the first deal with Hachette collapsed.

. . . .

The acquisition will strengthen Hachette’s position in a publishing landscape where the biggest companies often dominate. It is the latest in a wave of consolidations that has swept the industry in recent years, including the 2013 merger of Penguin and Random House, which created a publishing behemoth with about 250 imprints, and the News Corporation’s acquisition of the romance publisher Harlequin for $415 million in 2014.

By buying Perseus’s publishing program, Hachette will fulfill the long-term goal of its parent company, Hachette Livre, which is owned by the French media conglomerate Lagardère, to expand its publishing footprint in the United States. In recent years, Hachette has acquired Black Dog & Leventhal Publishers and Hyperion’s adult books list. The Perseus deal is Hachette’s largest acquisition to date.

. . . .

 “They all want more volume, and Perseus is one of the largest trophies out there,” said Mike Shatzkin, the founder and chief executive of the Idea Logical Company, which analyzes the book industry. “If you take the long view, I’d be so bold as to say we’ll have two big trade publishers 10 years from now, and no more.”

Link to the rest at The New York Times and thanks to Deb for the tip.

PG says this will almost certainly mean layoffs at Perseus. Some Perseus authors will likely lose their editors and find their books effectively become orphaned in the process.

Hachette UK sales drop 6.7% in fourth quarter

11 February 2016

From The Bookseller:

Hachette UK saw overall sales fall by 6.7% in the fourth quarter of the year due to lower e-book sales, with its parent company Lagardere Publishing saying that “market trends have reversed in the US and the UK”.

. . . .

A note in the Lagadere release said: “In 2015 market trends have been reversed in the US and the UK, with a rebound in volumes of printed books to the detriment of e-books, due to new contracts terms with Amazon. For the time being this digital transition remains essentially confined to the English-speaking markets and only in the general literature segment, which represents about 40% of total sales of the division. In the UK, Lagardere Publishing digital sales represent 26% of Adult Trade compared to 31% in 2014.”

. . . .

Tim Hely Hutchinson, c.e.o. for Hachette, acknowledged e-book sales had “slowed”, “after six years of stratospheric growth”. However, he emphasised: “We estimate that we remain the number one publisher in e-books and that, in the year, Hachette UK’s estimated market share rose by 1% to 22% of the e-book market. Digital sales now represent over 20% of HUK’s total sales.”

Despite the sales dip, Hely Hutchinson hailed 2015 “another standout year for the Hachette UK group”.

Link to the rest at The Bookseller

Hachette CEO Michael Pietsch on the Future of Publishing

2 December 2015

From Hachette CEO Michael Peitsch via The Wall Street Journal:

I’ve been hearing about the demise of book publishing since the first day I stepped through the doors of a publisher back in 1978. But here we are still, publishers like Little, Brown, with histories going back 100 and 200 years. What other American industry has companies still in existence after two centuries, evolving and modernizing but still doing much the same work? The most recent variant of the death watch: A digital revolution would cause e-books to replace printed ones, authors would overwhelmingly choose self-publishing, and publishers would follow carriage makers into oblivion.

After several years of rapid e-book growth, their sales topped out at about one-quarter of publishers’ revenues and have declined for a year. Print books have proved durable because, as a format, they’re simply hard to improve on. Music, movies and TV were all fundamentally altered because digitization allowed readers to experience those entertainments anywhere. Books were portable the day they were invented. Other forms have only just caught up.

And self-publishing? It’s grown hugely as an option for writers who want to reach readers directly. But writers like to be paid, in advance, for their work. Publishers are investors and risk takers. And a publishing company with longstanding media and marketing relationships is far more capable of getting attention for a new book than a writer working alone.

. . . .

Publishers’ essential work will remain the same—identifying, investing in, nurturing, and marketing great writers. The abundance of titles readers have come to expect will continue to gush forth. Pictorial storytelling will increase in popularity, and comic versions of novels and nonfiction will become commonplace. More titles will be published for children and young-adult readers, including books blended and layered with games. Beloved best-selling writers, living and dead, will publish books more frequently, often with help from co-writers. (Especially the dead ones.) Self-publishing will continue to grow, and appetites unnoticed by mainstream publishers, like the erotica explosion that began in online fan fiction, will find, well, satisfaction. New forms will emerge for mobile devices, as millions abandon e-readers with phones already in their pockets.

Ever-larger retailers and wholesalers bring significant margin pressure, which will lead to continued conglomeration. Social media will continue to expand the writer’s ability to connect with readers; publishers will deepen their relationships with writers, but they’ll also create content of their own. As runaway books sell ever-larger numbers, publishers will earn more on their biggest sellers—which will keep driving up the advances they pay for potential hits. At the same time, publishers will need to innovate and challenge assumptions about every aspect of the business.

Link to the rest at The Wall Street Journal (Link may expire) and thanks to Anthea for the tip.

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Ebook Sales down at Hachette

31 July 2015

From a Lagardère press release discussing 2015 first half results:

In the United States, the decline in activity, which had been expected (-7.8%), can be explained by the high level of activity in the first half of 2014 (including The Silkworm by Robert Galbraith and The Goldfinch by Donna Tartt) as well as a decline in e-book sales.

. . . .

Digital: in the 1st half of 2015, the weighting of e-books in Lagardère Publishing total sales declined to 10.7%, compared to 11.3% at the end of June 2014. This transition remains limited to English-speaking countries and to the General Literature segment:
– in the United States, in a declining digital market (slowdown seen since the beginning of 2014), sales of e-books have dropped (24% of sales for Trade vs. 29% at the end of June 2014), given a less successful slate of new releases and the implementation of the agreement with Amazon;
– in the United Kingdom, the market is stabilising and has been impacted by the January 1, 2015 VAT increase. E-books represented 33% of sales in Adult Trade(8) vs. 36% at the end of June 2014.

Link to the rest at Lagardère press release

“Implementation of the agreement with Amazon”

PG suspects this means Hachette’s agency pricing agreement with Amazon which allowed Hachette to increase its ebook prices. Is it possible that Amazon knows more about the optimal pricing of ebooks than Hachette?

Hachette chiefs dismiss subscription model

7 April 2015

From The Bookseller:

The c.e.o of Hachette UK and the chairman of Hachette Livre have both dismissed the e-book subscription model, calling it “absurd” and “cannibalising”.

In an interview in this week’s Bookseller magazine, Hachette UK c.e.o Tim Hely Hutchinson said: “People are always pitching new models to me, and the first thing I say is that the existing model works really well. I don’t believe in subscription. I don’t see how it would do anything other than cannibalise the business we already have.”

Meanwhile Arnaud Nourry, chairman and c.e.o of Hachette Livre, also condemned the model in an interview with French book trade magazine Livres Hebdo,  run in The Bookseller this week.

Nourry said the subscription model was a “flawed idea” even though it proliferated the music business. “Offering subscriptions at a monthly fee that is lower than the price of one book is absurd,” he said. “For the consumer, it makes no sense. People who read two or three books a month represent an infinitesimal minority. And there are bookshops. If I seem like a dinosaur, so be it. My colleagues at Penguin Random House say the same thing.”

. . . .

Hely Hutchinson acknowledged some publishers saw value in the model. “I know other people take a different view,” he said. “Within the limits of the law, I hope [HarperCollins UK c.e.o.] Charlie Redmayne will explain it to me, because I don’t get it.”

Link to the rest at The Bookseller

Hachette Livre’s Nourry discusses Amazon and e-books

3 April 2015

From The Bookseller:

For a year, while you were negotiating with Amazon in the United States, you did not speak in public. Was this very tough conflict worthwhile? 

It took up most of my time during that period. I did not express myself in public in order not to exacerbate the situation. Yes, it was worthwhile, as always when essential questions are involved. In this case, the question was whether the publisher or the retailer should fix selling prices for electronic books, and take account of the fact that many decisions taken in the United States have an impact elsewhere. I regret that this discussion took the form of a conflict, and I am delighted that we have resolved it. But if it were to be done again, I would do it again. All media industries that have not maintained control over their production in the electronic sphere are in great difficulty. If e-books were sold for $5 a copy, it would only take a few years for everything to change, creating a market without booksellers and a general public accustomed to paying almost nothing. Through huge mergers, the music business is now centred on three major world players. Diversity has been hard hit. Innovation in the sound sector is nothing like what it was 30 years ago. We do not have to the right to let this happen to books, which is the medium for creation, education, culture and democracy.
Your agreement with Amazon calls for improved sales conditions when you reduce your prices: have you reduced them?

No, or at least only when we have wanted to. The principle is not to keep the same prices all the time. So, we reduce them, raise them, test them. This is a marketing technique, and has nothing to do with relations with any distributor.
The conflict revealed  an unexpected desire for price regulation in the United States. With its experience of fixed prices in France, how does Hachette Livre explain the fact that it was at the front of Amazon’s firing line? 

Hachette Livre has played a special role since 2009-2010, when the agency contract was introduced. But I have no answer to the question as to why Amazon opened sales negotiations with us first. In fact, I hear more and more American publishers and booksellers point out the merits of the (French fixed price) Lang Law. But thinking it might be possible to replicate it over there is another thing ! It is not at all in the American culture.
What lessons do you draw from this conflict for your relations with Amazon and the world’s other major digital operators?

First of all, these large companies contribute to the market for books. We must forget the moments of conflict and realize that these companies enable us to reach different customers. Amazon has been a driving force. The same goes for Apple and Google. We must not throw the baby out with the bathwater. Secondly, in terms of relations, even if they are infinitely larger than we are, our creative capacity through our authors gives us a symbolic strength and consequently bargaining power. Last year, I was impressed by the number of authors who mobilized to push us to resolve the conflict. The situation is the same in France when we negotiate with a partner, which makes me confident and optimistic for the future of this (publishing) profession. But we must be able to control prices. If not, holding exclusive rights of our authors’ work will do nothing for us.

Link to the rest at The Bookseller

New Hachette HQ will be ‘talent magnet’

3 April 2015

From The Bookseller:

Hachette’s new London headquarters Carmelite House will become a “talent magnet” for authors and publishers, but the move will not compromise competition between the adult divisions, c.e.o. Tim Hely Hutchinson has said.

. . . .

“You have to go back to what’s right for the authors,” said Hely Hutchinson. “I believe authors really like the focus of being looked after by their publisher – be that Orion, Hodder or Quercus – and having an editor and a marketing and PR team concentrating on them, with the intimacy that this focus brings. But it is good and reassuring for them that they are allied with a group that can sit at the top table with those big customers.”

. . . .

On authors, Hely Hutchinson said he envisaged different types of author contracts in the future; one low advance, higher royalty, paying more often; another traditional high advance, lower royalty, paying less often. “I’d like to be able to offer those packages and within three years or so we will be able to – if there is demand,” he said.

Link to the rest at The Bookseller

Hachette Sales Down Nearly 5% in 2014

12 March 2015

From Digital Book World:

Full-year revenue dropped 4.9% in 2014, a year marked by Hachette Book Group’s bruising standoff with Amazon over ebook profit margins, which ended in November with a new distribution contract restoring a version of agency ebook pricing to the publisher.

Digital sales shrunk to 30%, down 3% since 2013, when ebooks and digital audiobooks together made up a third of Hachette’s overall revenue.

Hachette Livre, the division of parent company Lagardère that includes the U.S.-based Hachette Book Group, saw profits decline 11.7%, which the company attributes in part to an unfavorable comparison to an “unusually high number of major best-sellers” in 2013.

Link to the rest at Digital Book World

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