When Penguin began the restructuring of DK Publishing in 2009, it had two main objectives—to reduce the size of its list and to cut editorial costs to improve the profitability of its illustrated book group. What it hadn’t counted on was the phenomenal success of its publishing partnership with Lego. “That’s been the cherry on top,” said Peter Field, a Penguin veteran who took over responsibility for DK in summer 2009 as CEO. Since the Lego license kicked in, in fall 2009, DK has sold 6.5 million units through June 2011 and has 25 titles in its catalogue. The top-sellers in the line this year are LEGO Star Wars Ultimate Sticker Collection; LEGO Harry Potter: Building the Magical World; and LEGO Star Wars: The Visual Dictionary.
While the success of Lego has sped DK’s recovery, the foundation for its improvement was poured in 2009 when Field and others on his management team decided to cut the list by about one-third and to move more of the editorial, design, and production work to Delhi from England. Today, DK has about 300 employees in India and 300 in London, with 45 to 50 in the U.S. In cutting back the list, Field said, DK eliminated some areas where it wasn’t particularly strong, such as management, business, and sex, to focus on core areas that include children’s, adult reference, and gardening; like most publishers in the travel market, DK cut its list, but Field believes DK has increased its market share in the category. Field acknowledged that he “kept my fingers crossed that we cut the right titles,” but said, “18 months later every book on the list is doing better than expected.”
The company is still committed to using its model of publishing big illustrated co-editions aimed at a worldwide market. While the costs for DK’s signature illustrated titles have come down significantly, they can still cost over £1 million per title to produce, one reason DK continues to aim at a global market to help leverage those costs, Field said. In the first half of 2011, Field said sales to Brazil, Japan, China, and central and eastern Europe did surprisingly well, explaining that because of a one-year lag time in publishing in those markets, this was the year where the smaller list hit for the first time. “We expected to take a cut, but instead sales have gone up,” Field said.
In the U.S., which still accounts for about 40% of sales, DK is seeing solid sales of both its illustrated books and less expensive titles at bookstores and other retailers, but for different reasons. Field noted than when the financial crisis hit “we got lots of returns,” but as e-books have come to take a larger slice of the fiction pie, booksellers have turned to illustrated nonfiction as a way to offer customers something they can’t buy on most digital devices. At the mass merchants, the success of Lego has made those retailers more receptive to carrying other DK titles.
The growth in retail is important because, as Field notes, DK has not benefited as much from the digital explosion as other publishers. “We don’t have a real e-book market yet,” he said. DK has done e-book editions of its text-heavy titles, but is waiting for greater adoption of the EPub 3 standard before adapting its illustrated titles for the e-book market. The company has, however, been developing apps, opening its app store last December with the release of 10 travel apps. In the summer DK published three additional apps—the DK Human Body app ($13.95), DK Quick Cook app ($5.95), and DK Pregnancy Day by Day app ($6.99)—and Field has been happy with the results, noting that sales are coming from around the world (40% of Human Body sales were in the U.S., 40% in the U.K., and 20% elsewhere). Last week, DK released its first preschool app, DK My First Word Play app ($3.99) with plans to release more in 2012.
Field is also working to build the DK brand online. Recent in-house research has shown that DK is still trusted by parents; to enhance that trust DK has started dkquiz.com, a site that has 600 hours of questions designed to help students (and their parents) find accurate information on the Internet. At present, Field has no plans to monetize the site, explaining that “building trust for the DK brand online is all the monetization I need.”
Upping DK’s online presence and increasing its use of social media are among the primary strategies for 2012. The print list is set at about 195 titles, and Field said he doubts that list “will go north of 200 again.”
