In 2007, business student David Steinberger and his partners pitched an idea for a tool to help comic fans and retailers manage their pre-orders. Eventually, they hoped it could grow into a distribution platform for comics in digital format. They called their startup “comiXology.”
The idea was good enough to win an NYU Business Plan competition and attract a little bit of seed money, but few in the comics industry thought much of the concept of digital comics. They would only interfere with sales of paper copies. And besides, who wanted to read comics on a computer?
Ten years later, comiXology not only launched a successful business, they created a new market channel that has expanded the audience for comics, graphic novels and manga worldwide, all without strangling the critical direct market of brick-and-mortar comic shops. In 2014, after vanquishing the other startup competitors in the space, they were acquired by Amazon (NASDAQ: AMZN) and overnight became part of the world’s largest ecommerce operation.
Steinberger retains the title of CEO of the comiXology subsidiary while heading up Kindle comics worldwide for Amazon. I had a chance to check in with him about the company’s strategy moving forward, and how Amazon’s resources are making an impact three years after the acquisition.
Getting past the market plateau
Like all successful startups, comiXology combined a good idea with exquisite timing. Smartphones and tablets hit the market in a big way just as the company had developed its Guided View technology, which presents comics panel-by-panel on a small screen. The combination of factors led to a market explosion: between 2009 and 2014, digital comics grew from zero to an estimated $100M business, accounting for roughly 12% of the total comics sold.
Some recent industry data suggests that the big expansion of the digital market has leveled off, although Steinberger says that graphic novels and other digital products are seeing “big double digit” growth rates this year. Nevertheless, with the low-hanging fruit mostly harvested, Amazon sees the current challenge as building a larger overall market by getting new customers on-board, both in the US and overseas.
One of the company’s biggest initiatives in this area is the comiXology Unlimited (CU) program, which offers subscribers access to over 10,000 titles from dozens of top publishers for a monthly cost of $5.99, less than two average comic books.
“CU is a big onramp,” says Steinberger. “It opens up a range of content. Large percentages of those readers are new to those publishers and titles. It shows that, when given a chance to explore, people will find something they like and support it.”
According to exclusive data disclosed by comiXology for Forbes:
- New comiXology customers currently make up 60% of CU Free Trials.
- Being a member of comiXology Unlimited increases a customer’s reading frequency by 58 percent overall.
- 87% of subscribers say that comiXology Unlimited helps them discover new things to read
- 74% of subscribers say that comiXology Unlimited encouraged them to try new genres
Amazon’s tech bolsters personalization and audience targeting
The goal of matching readers with content is famously shared by comiXology’s corporate parent; Amazon has built the most sophisticated data operation in retail and continues to expand it in all directions. Since the acquisition, Amazon and comiXology have been integrating their systems, offering comics as part of the Kindle Unlimited subscription and Prime Reading (unlimited reading for Prime members) in addition to selling digital collections and individual issues through the Kindle Store as well as via the comiXology app.
Steinberger says the newest initiative is around affinity marketing, using data and Amazon’s machine learning systems to personalize recommendations and help readers discover content they’d like, if only they knew about it. Amazon refers to it as creating “diverse and inclusive connections between books and people.”
“We’ve run hundreds of tests across Amazon and continue to experiment,” says Steinberger. “For example, on Prime Day this year, we had several comics as part of a bundle deal for the PS4.” Amazon is also working with partners like the ticketing platform Fandango, offering codes for free digital comics with comic-themed movies like Wonder Woman and Valerian. It’s still early days for that, however. “We’re barely scratching the surface,” Steinberger says. “We’re not across all the business lines yet.”
One of the results is a more diverse readership. According to company surveys, the female audience has doubled since 2011, mirroring wider changes in the geek culture world toward inclusiveness.
Tomorrow, the world
While comics remain a niche market in the US, they are much more central to the consumer economy elsewhere in the world. Moving some of those readers to digital, or importing some of the consumption habits of foreign audiences to the US market, offers enormous opportunities for Amazon and its competitors.
“Japan is the ultimate model for what we should aim for in English language,” says Steinberger, pointing to a culture where people of every age, education level and demographic category buy and read manga as part of their everyday routine. Steinberger says he spends a lot of time working with the team in Japan on a number of initiatives to expand the digital market, bring more Japanese content to America and the world, and bring more US titles to Japan.
But Japan and Europe, especially the Franco-Belgian region where “bande dessinée” have been respectfully treated as art and literature for decades, pose a difficult business challenge.
“In Japan, we work with publishers, but things like the decision to go digital or allow something like Guided View more often belongs to the creator than the publisher,” says Steinberger.
Still, the company is making progress, expanding its catalog and readership of foreign titles significantly. ComiXology reports that there are now two manga publishers in the top 10 – Kodansha Comics and Viz Media.
The next 10 years
A lot has changed in the ten years since Steinberger and his team unveiled their modest business school project. Handheld and mobile devices have become ubiquitous, turning every screen into a potential display for comics and graphic novels. The digital channel has established itself as a supplement rather than a threat or replacement for brick-and-mortar, while the success of comics in mass media has increased the potential audience for publications.
Looking ahead, Steinberger sees changes to the funding model driven by crowdsourcing and platforms like Kickstarter and Patreon. He cites several creators recently raised their money on Kickstarter then went straight to digital publication through comiXology.
That has opened up opportunities for creators whose work might not have caught on through the direct market of comic shops, where traditional tastes and attitudes prevail. “Look at what’s going on with young adult comics,” says Steinberger. “Someone like Raina Telgemeier [who has sold millions of YA graphic novels] probably wouldn’t have been as successful if she only sold through the direct market.”
Whatever the challenges and opportunities, comiXology now has Amazon’s resources to develop new approaches to the audience and fend off competition. “Amazon’s business style, leadership principles, being customer obsessed, using data to drive conclusions, innovating at scale to create new customer experiences…. those are huge advantages for us,” he says.
But don’t take his word about the future. Steinberger confesses that, as a newly-minted MBA in 2008, he was sure his future career plan was to “get fired by a bank.”
“Instead,” he says, “I ended up in comics, which I love. It’s just been incredible.”