Since 1993 when Indigo first introduced their digital press, the printing industry has debated the merits of the technology, which markets it would best serve, which applications would eventually go all digital, and when we would see the demise of conventional printing as we know it. Here it is 17 years later and the sky still hasn't fallen in—at least not due to this new technology. So PRIMIR (Print Industries Market Information and Research organization) commissioned IT Strategies to investigate this marketplace and provide some insights into why the much anticipated tipping point hasn't occurred, when it might, and where opportunities exist today.
The key objective of the PRIMR Megatrends in Digital Printing Applications study was straightforward: Evaluate major print applications and determine which (if any) will migrate from analog to digital production printing, when, and why?
Over the course of eight months IT Strategies conducted extensive research with experts, printers, and customers via e-mail surveys and personal interviews—in all, over 900 respondents. The study focused on 12 applications: books, catalogs, direct mail, labels, magazines, manuals, marketing collateral, newspapers, packaging (folding cartons & flexible), and specialty printing such as calendars, photo books, etc.). The research was limited exclusively to production printing, excluding any equipment under $50,000 in acquisition cost akin to desktop printers and copier/MFP devices. Using equivalent letter-size simplex impressions/pages as the lowest common denominator, this study quantifies the page volume and rate of transition from analog to digital production printing for each application.
Tipping Point = Unstoppable Momentum
A surprise finding of the research: few of the studied 12 applications will tip within the time period of the study (by 2014), some have momentum to possibly tip by 2020 or later, but the tipping point for most of the applications is decades away, if at all. However, digital printing has made some serious inroads in the non-publishing related applications, especially where there is opportunity to add value thru complex variable-data content. Book printing, however, is the one publishing application that has embraced digital printing and will continue to see positive growth.
According to Marco Boer, vice president, IT Strategies, and principle researcher on this study, "A more important finding is that the analog production page volume is shrinking independent of digital production print volume growth. In fact, while digital production printing in North America is forecast for a compound annual growth rate (CAGR) of nine percent thru 2014, it is from a very small overall volume base (22 billion in 2009 to 33 billion pages in 2014). Despite the relatively small volume, the value of those North American pages, including value-added services is much higher than analog. Analog printing will see a negative CAGR (-4.3%) for the same period. Digital production printing would have to grow about 200% per year to even approach an overall market tipping point."
And, although not a focus of this particular study, let's not forget that many digital pages are bypassing digital production print entirely and shifting to decentralized self-print in the office in very short runs using copier/MFP or desktop printers.
Digital printing is a very attractive offering for print service providers from a revenue and profit perspective especially in niche applications where the value of the pages is much higher. The research reconfirmed the fact that digital production print thrives with smaller run length, complex (variable data), rapid response jobs. In 2009 in North America those jobs represented 1.5% of production print volume (if one excludes newspaper, catalog, and magazines digital production print it represents a seven percent share). (Figure 1)
As production run length per job continues to decrease, digital production print eligible share of jobs will grow proportionally. Figure 2 identifies the CAGR for the applications specifically covered in the study. Established applications for digital printing have lower projected growth rates, while those that are not established may have significant potential and high growth rates. Still, these growth applications currently represent relatively limited volumes. The report also identifies conditions under which digital printing adoption could accelerate even in the high analog volume segments such as magazines and catalogs. Despite that, the threat to analog is not digital printing. The true threat to analog is habit change and pages migrating to electronic displays/readers. A point in fact from the research—print specifiers reported that investment for design and marketing for electronic display is nearly equal for most production applications to investment in production print.
Opportunity abounds for manufacturers serving both analog and digital print markets. The published report details threats and opportunities as well as provides a thorough analysis of findings from both the printer and specifier for each of the 12 applications. The complete 420-page report is available for purchase from PRIMIR.