Brian Hibbs's Forecast (Latest Tilting at Windmills)
Posted: Sat Dec 19, 2015 10:51 am
We're in an extremely odd place in the comic book market right now: in a market that, for most retailers, really is focused on the "Big Two," both of those publishers have largely abrogated any roles of benevolent stewardship, and have both made simultaneous tactical errors that seem probable to break years of buying habits from their largest and most core readership. Most retailers I know are generally undercapitalized, and those who don't have a solid six months of operating expenses socked away (thankfully, I count myself at least toward that financially prudent camp) are looking at a mediocre Christmas season, and what looks like, so far, to be one of the weakest first quarters of product that I've seen in 26 years of selling comics. This could be really rough for a lot of participants going into 2016.
Let's start with DC Entertainment, which took two months off publication of "regular" titles in order to smooth a cross-country move from New York to Burbank. This, in and of itself, was worrisome because periodical comic buyers are nothing if not creatures of habit, and any time you suspend a habit, it makes it much easier for customers to reassess the actual pleasure they get from it. The timing here was even worse, because it was clear that many customers were getting tired of the "New 52" (DC's line-wide reboot from 2011) -- despite massive initial success with the New 52, large swathes of the audience were already starting to walk away, and "Convergence," the publishing stunt designed to fill that two-month hole, proved to be a great "jumping off" point.
DC came back in June with "DC You," an initiative that launched 21 new series, meant to spotlight character and creator diversity and refresh the line, and to embrace a new, younger audience that many retailers can tell you is actually out there.
But "DC You" isn't connecting with this new readership. Kind of at all: On the October sales charts, which represents the fifth issues of the initiative, only two of the 21 titles have sales over 30,000 copies (very roughly the sales level where companies with big overhead start cancelling books for lack of sales), and a staggering ten titles are selling under twenty thousand copies, which marks nearly half the initiative as an abject failure. At the same time, the changes to the core titles ("Batman," "Superman," etc.) appear to show the stalwart characters bleeding readers, and even the hail-mary for DC periodicals, the weekly series "Batman and Robin Eternal," is only selling at the end of its first month about where the previous series ended up. DC might be able to steal a bunch of marketshare with "Dark Knight III," but their core product and core market is clearly in big trouble right now.
The worst part is that it is really difficult to find a logical path out of it for the company -- creatively the company appears to be mired in house style and a small stable of creators. As an example, earlier this month DC announced new creative teams on three titles, and, as a retailer, it's very hard to get excited about creative musical chairs like that, and it's hard to imagine that kind of lateral thinking generating even one additional new sale.
I personally have a very hard time watching this happen because for 25 years DC was my #1 publisher -- and in a fashion in which it really wasn't even close. DC dominated my sales. And they've slipped down to #3 in 2015, which is just heart-rending. And getting out of it is so much harder because of the negative loop of backlist sales: poor-selling frontlist periodical comics irrevocably yields poor-selling backlist.
And backlist is where much of the real money in comics is.
But things don't look much more promising over at Marvel either. We're too early in the process to see the actual impact of the "All-New All-Different" initiative at Marvel reflected in the published sales charts (we need to be at month four or five to see that), but I can tell you the anecdotal reports I hear from retailer after retailer is that ANAD sell-through is generally pretty bad, with many of the books essentially just picking up at or below where they left off before the break, without the stream of new faces that we were all hoping for. This is despite orders being up, leaving a great number of unsold new number ones sitting out on the shelves.
Marvel did something similar to DC: they took several months of production "off" on the regular titles for "Secret Wars" and a series of "SW" related miniseries. The real shocker for me was that this plan was actually working for Marvel: customers seemed deeply engaged in the entire "SW" experience... at least until "Secret Wars" started hitting unconscionable delays. "SW" sell-through then fell off the cliff, leaving many retailers with lots of unsold (and unsalable!) books -- worse in this case because while there's some hope you might shift first issues of new series, pretty much no one is going to buy issue four of a miniseries after the mini has concluded.
Anecdotally, I can state that at my stores from mid-September essentially every "Secret Wars"-related comic, including the main book, took a sharp drop of about 20%, which turned those comics from profitable to "not." We're trying to steer the orders back toward profitability as fast as we can, but clearly there are always going to be casualties. And the truly painful thing is that, much like "DC You," "All-New All-Different" is stumbling out of the gate, and what should have been a grand repositioning that would draw flocks of new and excited readers to a revitalized Marvel line, like "New 52" did for DC, ANAD has arrived with just a quiet sigh of indifference from the majority of the readership.
In fact, my sales were down 4% in the month of November, the first drop we've seen after seven straight quarters of growth -- and these are 4% sales down on orders that were approximately 20% higher than the year before. That's bad and dangerous to ongoing operations.
How about the new and young readership? Marvel actually was starting to attract some of them at our stores -- books like "Squirrel Girl," "Ms. Marvel" and the Jane Foster "Thor" title were racking solid sales for us outside of the "traditional" Marvel customer. But that new/younger readership? They literally don't understand why you would start a book over again at #1. It makes no sense to them! And that confusion appears to have shooed a number of them off. In an equivalent sales period, our sales of the first issues of all of those series are actually below (dramatically so in the case of "Thor!") the final issues of the "old series" -- which was only on issue #8 for two of the three! But readers appear to be treating the relaunches as simply "issue #9." That's not typical consumer behavior.
And I hear similar things from many other retailers -- the "word on the street" from a wide swath of stores is that a vast indifference has begun to creep in among the readers of superhero comics, and that this miasma is softening the 4th quarter enough to potentially threaten these stores. This is scary because an enormous amount of stores in the market don't really have a fall-back position from "we sell superhero comics." As the old saying goes "They carry both kinds of comics: Marvel and DC!" Which puts you in a bad position if both companies are underperforming at the same time.
The problem is that a great number of retailers are deeply undercapitalized, depending on this week's receipts to pay this week's bills. In an ideal world you should have three-to-six months of operating expenses on hand, but I think that's pretty rare among the stores I know. But if sales are dropping in fourth quarter -- the quarter that's meant to pay for the rest of the year -- that's going to put people already in a precarious position further out on the ledge.
And then there's first quarter 2016.
January 2016 looked pretty mediocre (my orders were a full 25% below December 2015, yow!), but February looks downright awful, with virtually nothing new, exciting, or commercial debuting at all. If March follows the normal trend (April is usually the first "big" month at most publishers), I would expect a number of stores to fold or otherwise be extremely harmed by the current trends.
The advice I would give virtually any retailer in this current climate (and advice that I really need to personally listen to a little better!) is to pull orders and exposure way back, and to just reorder more titles, rather than thinking you have to have everything in stock all of the time. Marvel and DC very much want you to be holding as much inventory as you're willing to, but I think the trends are pretty clear right now: that money is going to do you more good sitting in your bank account than in Disney's or WB's; or out rotting on your racks. They make new comics each and every week. Many many many of comics -- you gain nothing from have too many of last week's titles.
The biggest difference between today and every other potential time for a crash (or even "Market Correction"), is that we have Final Order Cutoff to mitigate, or at least soften, our actual exposure -- we're only three weeks or so out on that limb, so working that FOC order every week, and slashing things as appropriate is something that every retailer should remain vigilant about.
I would also strongly urge every retailer to take a hard look at what and how you stock, and encourage you to diversify your stock -- I think that the market is starting to say that the days of being a "superhero-only" store are beginning to be numbered. But that isn't a switch that can be made on a dime -- moving the direction of your store is a task that is better measured in seasons than weeks. You can't start early enough.
We have to be mindful that the marketplace is changing, and that we have to change with it. I see a market that is moving away from line-driven buying, that is growing tired of the constant cycle of relaunch and reboot, that has far more options for their time and mindshare than ever before, and that can meet their craving for superhero material increasingly in other media. And that has, most dangerously, had their long-standing habits interrupted by their very pushers. These are trends that scream for caution and thoughtfulness and reinvention of our core products. Watch carefully how the market threads the needle in the first quarter, and let's hope that Spring brings a fresh renewal!