Digital Comics: Competing with Marvel and DC

Jim FalloneBy Jim Fallone, Dir. of Publishing Coordination, Andrews McMeel

Whether creator or publisher-owned, comic books live in a decidedly unique distribution environment, lacking an industry-wide focal point for consumers – there is no Barnes & Noble, Amazon or iTunes; no Wal-Mart or Target; no Netflix or Blockbuster. The core of comic book brick-and-mortar retailing is the individual mom & pop retailer with little influence beyond their own zip code, and the primary dedicated national entity for comics distribution is a rack jobber, Diamond Comic Distributors, Inc., which no matter how you explain it, is pretty much just a UPS hub.

Comics retailers typically fail more frequently than any other retail enterprise save restaurants. Store turnover is high, and those that do survive often carry as much as 50% back issues in saleable inventory. A significant amount of revenue through this channel is derived from the sale and resale of previously-owned backlist titles for which no revenue or royalties return to the publisher or creator.

Child Services would call this anything but a healthy environment for content creators or publishers, but for more than 20 years, comics have primarily been sold through this fractured retail network.

While in trade publishing, there is the “Big 6”, in comics, there is the “Big Two”. Marvel Comics and DC Comics dominate the harsh comics landscape, which saw an estimated $429.47 million in direct market sales (-2% year-over-year) in 2009. The “Big Two” combined for 78% market share, effectively controlling distribution through the strength and depth of their well-known brands and the shelf presence they command. This is a very fragile world and already it is showing signs of the impact of digital distribution. The recent “consolidation” at Diamond and their struggles with minimum orders are not because the size of the market is shrinking but because it is growing and it is moving to the web.

Marvel and DC saw this coming and have already established their digital strategies.

Marvel Digital Comics Unlimited

Marvel realized the fundamental problems with comics’ retail distribution model first and their strategy has been to embrace the direct sale of digital comics, and they have been relatively successful with Marvel Digital Comics Unlimited. Unlike a music-based service that lets you download content, MDCU is all online. Recognizing the long tail value of their content, they made an important decision to make their backlist easier to obtain, taking back “ownership” and revenue usually left to the collector market and back issue sales.

MDCU’s searchability by author, illustrator and character helps new readers explore the deep history of the Marvel Universe, and the ability to read newer titles lays the foundation for an alternative distribution pipeline, direct to their customers, bypassing the fractured retail environment of traditional print comics.

“We did not want to get caught flat-footed with kids these days who have the tech that allows them to read comics in a digital format. Our fan base is already on the Internet. It seemed like a natural way to go.”

— Dan Buckley, former president, Marvel

With MDCU, Marvel has made accessing their digital content extremely convenient, which makes the search for pirated content more inconvenient by comparison. For heavy comics readers, MDCU is a good value, too, particularly with its monthly subscription options.

Disney is trying Marvel’s strategy of monthly subscriptions but have found generating the traffic is not as easy for their younger audience, so they are experimenting with iPhone apps. But for Marvel, which has a long history of direct engagement with their readers, it seems to be working well. Now that they are owned by Disney, we will see if this changes, but for the present, they seem to have a strong model.

DC approaches digital differently

Recognizing that creators in a digital world have access to the same distribution tools the major publishers have, and that search is a great equalizer, DC primarily focuses their digital efforts on community-building and content acquisition via Zuda Comics.

Since creators began successfully taking control of their properties in the print world, most notably back in the early 90s with the launch of Image Comics, Marvel and DC have maintained their dominance by leveraging their high-profile characters and being able to pay star creators more than most could make publishing on their own. Digital comics have lessened that advantage, and they know star illustrators and writers can now compete head-to-head much more easily than they could in print.

They also know that comics inspire intense fandom, and many of its top consumers aspire to be creators themselves.

Their solution, Zuda, is designed to provide independent content creators access to DC’s bigger mainstream distribution by offering them something very difficult to get on their own – maximum exposure and a built-in fanbase. The key to this strategy is to build a high-traffic portal and then market to the community that congregates there. The promise of Zuda is that it has the potential to build a Facebook-like environment around DC’s brands, as well as providing a forum for new talent to be discovered and marketed.

This is strategically designed to combat the big threat for both Marvel and DC – that the Internet will provide everyone the ability to cost-effectively create and distribute their own comics. Digital distribution means the prohibitive cost of getting a comic designed, printed, into Diamond’s warehouse and on the rack of a mom-and-pop retailer is eliminated. Today, a comic book created on a laptop is only differentiated by its ability to generate traffic on the Internet.

At the moment, Zuda hasn’t quite lived up to its potential but it is still early.

The poster child of ‘synergy failure’, the dissolving of AOL Time Warner means there is no broadband partner to provide support, nor clear leadership to really take advantage of the social community aspects. The strength of DC’s brands gives them a lot of leverage and a large backlist yet to be digitized, and a large volume of content with high demand is waiting to enter the market. DC can drive a lot of volume to devices or e-retail sites. Just where and when is the $24,000 question.

Once they determine the digital destiny of their backlist, they can really have a major impact on the digital market.

One thing is sure: both companies have leaned toward models that focus on direct distribution to their own audience base via a dedicated community hub. This is a clear signal that they aren’t depending solely on the brick and mortar comic world, and that they don’t see devices like Kindle, or even the iPad, as the ultimate solution.

With 78% combined market share, Marvel and DC are for all intents and purposes, the comic book world. How can anyone compete with this juggernaut?

That’s a question answered in “Level the Playing Field”, Part I and Part II.

Jim Fallone is the Director of Publishing Coordination at Andrews McMeel Universal, working on digital workflow and eBook strategies. With nearly 30 years in the industry, Jim has experienced every aspect of book publishing from acquisition to remainder, and over the years has been involved in some of its great successes and its biggest failures, including the introduction of new retail product categories like direct-to-purchase video and books-on-tape, New York Times bestselling publishing programs, and sales phenomenon such as Pokémon.

One thought on “Digital Comics: Competing with Marvel and DC

COMMENT

Your email address will not be published. Required fields are marked *


*