For
decades the comic book publishers like Time Warner’s DC Comics relied on
licensing of properties to bring in revenue during slow periods in the comic
book industry. The money made from sales of merchandise such as toys, clothes,
video games and other products often offset the declining sales numbers for
comic books and kept the industry afloat during tough economic times
Now
that revenue stream seems to be drying up for Time Warner’s DC Comics. With
Mattel’s comic based DC Universe Classics toy line and its TV-based Young
Justice toy lines coming to a close due to poor sales at retail, it’s clear
that the business problems that plagued the comic book industry for two decades
are now starting to stagnate the once profitable retail licensing and
merchandising part of the business.
The
sales numbers are so bad that Mattel has sworn off producing toy lines based on
DC Comics animated programs. While animated shows like Batman: Brave & the
Bold, Young Justice which were somewhat popular on Cable TV with two to three
million viewers, the merchandise based on them did poorly at retail.
With
a median retail price of $19.99-$24.99 for a 6” action figure and $11.99-$14.99
for a single 4.5” action figure they were out of the reach of many younger toy
buyers who found a higher entertainment value per dollar with WWE action figure
three packs at $19.99-$21.99, Transformers or Beyblades at $11.99-$14.99 or
Video games at $14.99-$59.99.
Since
2010, it’s become harder to sell comic-book based superhero products to
children at retail. While toy lines such as DC Universe Classics and Young
Justice were sold in toy stores, Wal-Marts, K-Marts and Targets, in the toy
aisle children weren’t buying most of them.
It
was adult collectors.
And
the median age of those adult collectors is 35.
A
median age that high for a licensed toy line is bad for the toy business. A
median age that high means that most of the characters in the DC comics catalog
have no brand recognition with children.
Having
a median age that high is going to bring down the value of the DC comics catalog
and DC Comics properties long-term. Especially with licensors and retailers.
Without brand recognition among younger buyers it’s going to become harder to
sell products such as action figures, T-Shirts, video games and other
merchandise over the next ten to fifteen years.
It’s
clear the two decade decline of sales of comics in the comic book industry is
finally starting to encroach on the licensing of DC Comics and DC Comics
properties. Since 1996, an entire generation of children has grown up without
seeing a comic book or DC Comics Superheroes in places such as supermarkets,
newsstands, or drugstores.
Unfortunately,
many in the comic book industry and the toy industry didn’t understand that
without long-term product visibility in venues children go to it’s hard to sell
merchandise to them. As comic books comic book based merchandise retreated to
comic shops, new licensed characters such as Harry Potter, Yu-Gi-Oh, WWE
Wrestling, cable sitcoms like iCarly Victorious, Disney Princesses and Monster
High filled the void that DC Superheroes left at retail with casual buyers over
the past ten to fifteen years. As these new characters gained in popularity and
visibility they gained brand recognition with the millions of younger buyers of
the current generation.
Compounding
DC Comics’ product visibility and brand recognition issue with younger viewers was
Time-Warner’s cancellation of Saturday morning cartoons in the mid 2000s. Time
Warner didn’t see the long-term damage it did when it ended its Kids WB! lineup
then for the cheaper manga-based syndicated CW4Kids.tv content . By removing
that line-up of original content from broadcast TV and moving new cartoons to
cable, they cut their audience for those cartoons in half. Many homes in
inner-city and rural areas don’t have cable and relied on broadcast TV to get
their content. And due to the economic crunch of 2007, even more were cutting
cable in favor of the internet.
By
moving DC animated programs to cable Time-Warner reduced the visibility of DC
Comics Superhero characters with younger viewers. TV shows like Batman: Brave
and the Bold and Young Justice were often broadcast on obscure cable channels.
Worse, they were put on late at night when most younger viewers couldn’t see
them.
This
lack of visibility among younger consumers has already done considerable damage
to the DC Comics Brand. While many parents from Generation X remember DC Comics
Super Heroes, the young adults of Generation Y and Millenials don’t know anyone
outside of Batman or Superman and some of their related characters.
When
it becomes difficult to sell licensed product to small children and tweens at
retail there is clearly something wrong with either the approach to business or
the business model.
And
both DC Comics’ approach to business and business model has been broken for
close to two decades.
The
average comic book sells 50,000-70,000 units. While more popular issues sell
within the 100,000 range if they’re lucky.
The
average production run for a commercial mass market toy line is 250,000-500,000
units a quarter of a calendar year.
When
one does the math it’s clear the numbers don’t add up. There aren’t enough
customers from the comic book reading audience available to buy all the product
in the commercial marketplace.
Which
is why merchandise piled up at retail nationwide at a 4:1 ratio and much of it remains
on store shelves to this day.
Over
the past two years Mattel catered to comic fan demands in its DC Comics action
figure offerings. Unfortunately, they learned the hard way while a character
can be popular in a comic book series and with comic fans, that popularity isn’t
strong enough to sustain a characters’ product at mass-market retail where
hundreds of thousands of units have to move for a profit to be made.
Moreover,
the audience from the comic shop is not an area for growth potential. With the
median age at of a DC Comics consumer being 35 and getting older, there are no
new younger customers to be brought into the marketplace to buy DC Comics
licensed product.
While
efforts have been made to fix the cosmetic appearance of the product, (DCnU)
the impact of those changes have not and cannot improve the sales and
visibility of DC Comics products at retail. The under 35 consumer still has no regular
exposure to DC Comics characters outside of a comic shop or an obscure TV show.
Worse, they have no access to materials outside of a comic shop or an obscure
TV show.
Which
making it hard for licensors to sell merchandise or related products on store
shelves.
Companies
like Mattel don’t make a resolve to stop producing product based on animated
programming with millions of viewers unless there is something wrong with the parent
company’s approach to business. And retailers like Wal-Mart, Target and K-Mart
don’t stop stocking licensed product unless there is something wrong with the
business model of the source company.
If
DC Comics doesn’t change its business model and its approach to business it could
severely damage the DC Comics brand over the next ten to fifteen years. Right
now it’s hard for younger customers to recognize DC Comics Characters as a
brand. Outside of theatrical films like The Dark Knight and live-action shows
like Smallville, most younger customers under the age of 15 haven’t seen a
superhero in their original hand-drawn comic book style. Even fewer have seen a
comic book.
Compound
this with a lack of visibility of characters and products in outside venues
such as drugstores and supermarkets along with higher prices for product it’s a
recipe for consumer confusion and frustration at retail.
And
the constant reboots, retcons, and revamps in DC Comics comic books aren’t
helping to improve the brand recognition issues. Each new version of a
character makes it that much harder for customers to recognize them and
establish a relationship with them. That prevents DC Comics from establishing
itself as a brand with new younger consumers.
It’s
easier for a younger consumer to get into Harry Potter, WWE or Monster High than
it is for them to understand the confusing hard-to-follow stories of DC comics
and the enormity of the DC Universe. There are multiple versions of characters
and multiple sub-universes within the DC Universe currently. Even a 38-year-old
like myself who knew all the characters since he was four years old can find it
aggravating and frustrating to understand these days.
And
that’s why the DC Comics brand is struggling at retail.
For
twenty years the comic book industry has catered to the needs of the hard-core
comic fan. Unfortunately, the purchasing power of that demographic is not
strong enough to sustain the DC Comics brand in an international commercial
marketplace. With the median age of the hard-core comic fan at 35 there’s no
place for the industry to expand in terms of licensing and merchandising.
A
commercial manufacturer like Mattel can’t make a profitable brand out of a shrinking
demographic of White males over the age of 35. Nor can it sustain its business
catering to said customers. This was proven over the past two years with the
poor sales of collector lines such as DC Universe Classics, Justice League
Unlimited Batman: Brave and the Bold and Young justice at retail.
All
those lines catered to the comic fan producing action figures of obscure and
long-forgotten characters along with the Superman and Batman variants. And all
of them failed to sell the hundreds of thousands of units needed to sustain a
commercial brand on the national retail level. Worse, they couldn’t even sell
out as online exclusives in some cases.
At
the 2011 San Diego Comic Con 2011 where collector oriented DC Comics exclusive
product was outsold by the Monster High Ghoulia Yelps doll. Worse, on the Day
of sale on Mattycollector.com, after the con August 1st ,2011 The
Ghoulia Yelps doll sold out before all the other exclusive products which
languished online for two to three weeks.
When
licensed comic-book related products can’t move at a comic-con something is
WRONG. And when it’s outsold by a non-comic product there’s a clear sign that
the marketplace is changing.
Observing
the problems Mattel is having moving DC Comics related products at retail, I
see a paradigm shift in the market regarding superheroes. A shift moving the
market back towards the young tween, and teen consumer and the casual buyer.
With films like the Avengers making over $1 billion dollars at the box office
and its movie merchandise flying off store shelves I believe the market is
moving from the diehard comic fan towards a larger more general audiences.
DC
Comics and its licensors must adapt to this new paradigm.
In
the wake of this paradigm shift, DC Comics must realize that it can’t continue
to run its corporate business like a comic shop and catering to diehard comic
fans. This approach to business is not going to allow a division of Time-Warner
to compete in a changing entertainment marketplace. If it’s going to reach an
audience of younger customers it’s going to have to move past the aging
audience of over 35 customers at comic book stores and reach the tweens, teens
and other casual buyers who shop at drugstores, supermarkets and other big-box
retailers. Doing the math on the diehard comic fan who a median age of 35 now,
in 15 years most of these customers are going to be 50 years old and some of
them are going to be 65 and 70. With an audience that old there is no further
room for growth.
And
no new younger customers available to recognize DC Comics characters or buy DC
Comics related products. Most of them will remember other products like video
games, WWE, Beyblades, Disney Princesses and Monster high from their childhood.
Which
is why DC Comics must make efforts to reduce the median age for its comic books
and comic related products to 13 and its minimum age to 7. Young customers in
this age bracket are consumers who can grow with the product over the next ten
to fifteen years. They have more disposable income. And they are more open to
recognize characters when exposed to them.
In
rebuilding the DC Comics Brand Time Warner must make efforts to increase its
exposure to a larger audience. Time Warner must make efforts to make DC Comics
Characters visible outside of the comic shop. Saturday morning Cartoons on a
Broadcast network like CW4KidsTV could increase visibility with younger
viewers.
Or
the Broadcast networks could just bring back Saturday Morning cartoons or
Weekday afternoon cartoons. Yes, they are glorified 30-minute commercials. But
that’s their job to move merchandise and establish brand recognition with
customers. Let’s face it many a childhood memory has revolved around these
kinds of shows.
Besides,
it’s better when they’re on broadcast TV. It beats watching pirated episodes on
YouTube or Vimeo. With so many people cutting the cable, it’s time Warner
brought back Kids WB! to its CW affiliates to supplement the Cartoon Network
broadcasts in the hopes of getting more new viewers in urban and rural areas.
In
addition to reducing the median age and making efforts to increase exposure, DC
Comics must also make efforts to reduce prices of its licensed products and
make them more affordable to younger buyers. One of the big reasons many casual
consumers passed on action figures over the past two years was the
collector-oriented price point. Most parents balked at paying $11-$25 for a
single action figure when they have other options in front of them with a
higher entertainment value per dollar. If products were priced in the $5-$12
price range they’d move a lot faster at retail with consumers strapped for
cash.
The
paradigm for business in the comic book industry is clearly shifting.
Management at DC Comics must understand that their approach to business has to
change from catering to the small aging audience of diehard comic fans to the
larger audiences of casual consumers. DC doesn’t need new number one issues or
new costumes to get new customers. However it needs to change its business
model so customers can access and recognize their products in the 21st
Century.
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