Eight divisions, three pillars, one group – this has been Bertelsmann’s structure since January 2016. After coming into effect at the beginning of last year, this composition is the visible result of the various strategic advances that have been made in recent years. Bertelsmann now has a broader portfolio than ever before.
The basic strategic rationale behind the new structure is to spread the Group’s opportunities and risks more broadly while simultaneously increasing the company’s transparency.
Its greater diversification can be seen at various levels. For one, Bertelsmann entered an entirely new business arena, the education sector. In the long term, this sector will represent the Group’s third pillar of business, alongside media and services. The reason for this move was obvious. Bertelsmann has long possessed the content and services expertise that education needs, and the education sector is growing markedly as a result of several major trends. As a result, Bertelsmann has gradually built up a range of activities in this field in recent years, focusing on vocational training in healthcare and technology. All of these businesses are now a part of the newly created Bertelsmann Education Group.
Bertelsmann also gave its media and services businesses room to grow. To make the most of important activities, the music company BMG became a separate division, and Arvato refocused its energies on services businesses. The company pooled its printing businesses into the Bertelsmann Printing Group, to continue developing them under a shared umbrella in spite of a challenging market environment. Each division also underwent further diversification. RTL Group, for example, reduced its dependency on advertising, and it found new revenue streams from sources such as cable carriers. Arvato, too, has long since come to rely on a broader customer base for its services than just a few years ago.
This increased focus on activities outside Europe has also broadened the Group’s base for businesses geographically. The expanded fund activities with their respective focuses on Brazil, China, India and North America were also grouped into a separate division in 2016. The result is a “new Bertelsmann” with eight divisions.
RTL Group broadened its revenue base step by step. Traditional TV advertising was still the Group’s most important revenue source, generating 48 percent of its revenues, but the share of digital revenues, for example, from the Bertelsmann subsidiary’s online video sites and ad tech platforms, is rising. Last year, for the first time, digital revenues accounted for more than 10 percent of total revenues – a milestone that the Group hadn’t originally planned to achieve until a few years from now. Another important source of revenue for RTL Group was income from Fremantle Media’s content production and the distribution of rights and licenses.
From home accessories to small furniture items – when it was launched last summer, the online store of the German home living magazine “Schöner Wohnen” already offered more than 1,000 products. The launch expanded Gruner + Jahr’s e-commerce activities into the home living segment. All products in the new shop are selected and recommended by “Schöner Wohnen” experts or selected guest curators. “Schöner Wohnen” also features some items on specially marked pages in the magazine.
Well over a million discs delivered within only six months – Sonopress struck a chord last year with its production of the Ultra HD Blu-ray Disc (4K). The Bertelsmann Printing Group subsidiary is one of the few companies in the world that is certified to produce the innovative storage medium. Demand from both Europe and North America is high – numerous Hollywood studios including Warner Bros. and Universal Pictures are among its customers. Thanks to intensive process development and machine configurations, Sonopress was one of the first companies in the world to produce Ultra HD discs with a storage volume of up to 100 gigabytes.
The Bertelsmann Education Group took up operations on January 1 last year, forming Bertelsmann’s third mainstay of business alongside media and services. Besides services for educational institutions, the Group has a particular focus on digital, professional training (e-learning) in the fields of healthcare and technology, a sector that continued to see especially strong growth in 2016.
A look at the Bertelsmann subsidiary Relias Learning provides impressive evidence of this. The online education provider increased its customer base to around 5,500 corporate customers, whose employees complete some 30 million courses a year. The expansion of the business was fueled by several company acquisitions in North America, gaining Relias entrance to the market for training in hospital settings among other things. The company also improved its analytics processes to further personalize its innovative training offerings and designed more than 400 new online courses for healthcare workers. Relias is breaking new ground in providing access to these offerings as well – a first app is now available that allows nurses and caregivers to complete Relias courses on mobile devices.
Udacity, which specializes in technical training, also expanded its range of courses last year. The company is constantly developing new Nanodegree programs to qualify students for technology jobs for today and tomorrow, including the “Self-Driving Car Engineer” and “Artificial Intelligence” Nanodegree programs.