Pearson plans to launch its own print rental program for courseware and reduce e-book rental prices by up to 50% as it bids to accelerate its shift to digital.
The company issued a profit warning in its January trading update this morning (18th January), saying that it expected profits to be between £570m-£630m this year, well below the City expectations of about £700m, and has slashed its target of £800m in operating profits for 2018, which has resulted in its share price plunging by 23%.
Despite previously anticipating that its North American courseware business would be broadly stable, Pearson saw a £180m decline in profits in the business in 2016 and now predicts that “many of these downward pressures will continue”.
As a result the publisher plans to accelerate its digital transition in higher education, to manage print decline, and to reshape its portfolio.
One way it will do this is to be more competitive in the courseware rental market and the publisher plans to reduce e-book rental prices by up to 50% across 2,000 titles - “making digital rental the best option for price-conscious students”.
The publisher also intends to launch its own print rental program, which it will pilot with an initial group of 50 titles with approved partners. “If successful we will scale this program rapidly,” the company said.
Pearson will invest £50m in the new ventures, which will “accelerate our product roadmap by two years”, it said.
Pearson also issued an exit notice to sell its 47% stake in trade publisher Penguin Random House as part of its trading update this morning, with majority shareholder Bertelsmann saying it was “open” to buying the stake if “the financial terms are fair”.