In April, 2010, Marvel, a subsidiary of Disney (DIS), in conjunction with Comixology (a developer of comic book reader applications) unveiled its Digital Comic Book Reader product, which can be utilized on Apple’s (AAPL) iPad, iPhone, and iPod Touch. With this new technology, it may be possible to elevate comic book popularity back to the level achieved during its boom period in the early 1990s, when mainstream media outlets (newspapers and television) reported on major comic book storyline events. Marvel hopes that by making its comics more accessible on new platforms, it will spark the next boom.
Looking back to the early 1990s, Marvel’s concept of taking its comic book characters, such as Spider-Man and the X-Men, in new directions may have been partially spurred by then-owner Ronald Perelman. He later sold Marvel’s back catalog to Saban Entertainment (which was subsequently sold to Disney and later led to a reunion of sorts). At this time, Perelman also started Marvel Studios, which would produce television and movie projects. The comic book industry as a whole took a sharp climb upward in sales as mainstream-media reported on comic book events like the “Death of Superman” storyline, The Spider-Man “Clone” saga, and the crippling of Batman during the “Knightfall” story. Speculative investors took notice and entered the comic book market to grab what would hopefully be “Collectors Items”. As a result, Marvel released a number of gimmick comics, which included hologram covers and variant covers for new titles, as well as re-launches of its most popular titles. (#1 issues have historically been higher in value than subsequent issues). A specialized comic brand was created by novelist and film maker, Clive Barker, and published by Marvel under the “Razorline” brand. Storylines were enacted that would encompass all of the company’s titles, and these crossovers helped boost sales of the newer or lagging franchises.
But all good things typically come to an end, and in the case of comic books, sales plummeted as the industry slumped, and Marvel entered into bankruptcy proceedings. It was purchased by Isaac Perlmutter, who owned Marvel’s Toy Biz subsidiary. Since then, Marvel has gone on to regain its popularity through its feature films. For instance, the Spider-Man movie grossed $821.71 million worldwide, after a record-breaking opening weekend of $114.8 million. Also successful were the X-Men, Fantastic Four, and Iron Man films, along with their sequels.
However, the mainstream success of Marvel’s films did not spill over to the comic book industry. One reason for this was that the price of comics had risen to approximately $3 - $4 an issue, which was financially out of reach for some of the younger demographic Marvel had wished to attract. Collectors also appeared uninterested in returning to this industry, despite ongoing crossover events. Furthermore, with the decline of the industry came the closure of many “brick and mortar” comic book stores, thereby further limiting availability. With the rising costs of print production preventing lower pricing, Marvel decided to pursue a different medium to try to revitalize the flailing comic genre.
In late 2007, the company launched its online product, Marvel Digital Comics Unlimited. Through monthly and yearly subscription options, customers have access to a digital archive of over 2,500 back issues from Marvel’s Web site. This had been successful in garnering approximately $2.5 million in revenues in 2008. Recently, with the release of the iPad from Apple, a new opportunity arose.
Owners of Apple’s iPad, iPhone, and iPod Touch products can download a free MARVEL COMICS application, which enables users to view comic book content on their devices. Comics can be purchased through the iTunes store for $1.99 each, and stored in a virtual library within this application. This app has an additional feature where customers are able to find “brick and mortar” comic stores to purchase these issues. The availability of comics will probably increase in the future due to Marvel’s association with Disney (which purchased the company in late 2009), that marriage may lead to comics being sold in national retailers, such as Wal-Mart (WMT).
The comic reader application is easy to use and comes with an animated tutorial. More important, the artwork retains its visual quality in its conversion to a digital format. There are options to read each issue one frame at a time, or page by page. The launch began with approximately 500 issues, with a handful of free comics available for interested customers to test drive the new product.
The bright side of this release is that at $1.99 an issue, it is a more cost-effective medium for readers to follow their favorite titles. In addition, Marvel is able to offer free sample issues to attract new readers to other titles. Marvel is also planning to offer digital releases that coincide with new print issues, making the comics available to customers that lack a physical store in their area.
Another positive is that Marvel can attract new customers who previously read comics during the aforementioned boom period, but lost interest because of the space needed to store hard copies. With the popularity of Marvel’s licensed character-based films still strong (the recently released Iron man sequel grossed $128.2 million in its opening weekend), the relative ease of the iPad application may draw the interest of casual readers who enjoyed the films. Another concept that may appeal to the mainstream consumer is the adaptation of popular novels to comic book format, including the works of such authors as Stephen King (The Dark Tower Series, The Stand), Peter Straub (The Talisman), Orson Scott Card (Ender’s Game, Ender’s Shadow) and Jane Austen (Pride and Prejudice).
However, there are a few problems that may need to be addressed by Marvel. One major issue is that at this time, current subscribers of Marvel’s Digital Comics’ Web site are not able to transfer their membership to the iPad. Furthermore, the tablet does not support Adobe Systems Inc.’s (ADBE) Flash program, which Marvel utilizes as its Web site viewer. To have access to both, customers have to pay twice for the same product.
This leads to the other pricing issue that consumers have complained about. To date, Apple does not offer a monthly or yearly subscription for Marvel titles through iTunes, and this may turn away customers who do not want to pay nearly $2 an issue in order to follow a storyline that intertwines a number of Marvel’s comic titles. Also, the speculative collectors who flooded the comic book market in the early 1990s would not have any incentive to return to a digitalized format. The issues are not transferable, and digital content does not increase in value over time. Furthermore, while this application supports Marvel content, some comic book fans may decide to turn to the cheaper offerings made from independent comic book publishers, such as Dark Horse Comics, which sells issues at half the price of Marvel’s offerings ($0.99 per issue).
All told, it is doubtful that the introduction of the Marvel Comics application for Apple’s family of devices will bring the comic book industry back to the level of popularity garnered during its peak period. Still, it may help sustain interest in Marvel’s characters, and benefit sales in its other areas, such as films, toys, and video games. Also, under the Disney umbrella, Marvel has the potential to reach a new level of profitability since it now has access to Disney’s global network and vast customer base.