Monday, December 19, 2016

More Regarding Our Move Away from Comics

I knew some of the regular readers here would take interest in my announcement last week that Desert Sky Games is getting out of the comics business.  I did not expect the greater comics media to take notice of our move, as observed by this article and this other article from Comics Beat, as well as a mention in Bleeding Cool that I found bewildering given that it appears they reached out for information or comment to everybody except me.  I am rather central to DSG's policy decisions -- rumor has it they are entirely my doing -- and I am not that difficult to reach.  I guess I must not understand journalism.

Given the commentary from the articles, on social media, and in-store, there are a few topics that I think would be well served by some additional attention here.

It is easy to assume that since DSG only carried comics from 2013 to 2016, we merely dabbled in the category and did not commit to it fully.  The underlying assumption is that comics did not fail for us, we failed comics by not going the distance.

Let me dispose of the first part of that right away.  Comics did not fail us.  They are, even now in the doldrums, producing substantial gross revenue.  I believe the trend line has turned negative on us in this market specifically and under current conditions specifically, but as I have said before, I do not think the end is nigh for comics overall.  DSG made a lot of money on comics in three years.  A great deal went right.  What we're seeing now is a downturn in which too many misses on content, rising costs of business, and a glut of product have left our hybrid store poorly positioned to continue in the category.  It is possible to be making money on a product line and still have it be the correct move to exit that product line.  Dollar for dollar, we are better off allocating those resources to Magic: the Gathering, for example.

It is fair to state that the most successful comic businesses are those that commit to comics and basically nothing else.  When you look at the laundry list of the top dogs, they are either comics-first (by a lot) or comics-only.  Mile High Comics.  Midtown Comics.  Graham Cracker Comics.  Here in Arizona, we have Samurai Comics and Jesse James Comics.  Products in the greater game trade are either an afterthought or absent entirely from those stores.  With consolidation comes economy of scale, and with that comes a greater ability to ride out downturns.

The comics category punishes dabblers.  No comic collector will take a store seriously and consider opening a subscription pull box if they do not see essentially all relevant new releases on that wall every week.  A store does not need to explore the farthest reaches of the indie wilderness, but the top books from Marvel, DC, and Image must be present, along with anything else that's hot Right Now and a smattering of other recognizable titles.  DSG regularly stocked virtually every Marvel and DC product, and the frontlists from many indie publishers.  We did not have the breadth of Jesse or the depth of Samurai, but by and large we had the goods.  Make no mistake, with comics, we were in it to win it.  Our comic clientele deserved no less than that level of professionalism and focus.

Diamond Comic Distributors
A common refrain in the comic trade is how difficult it is dealing with Diamond, the exclusive wholesale supplier for essentially all comic product.  I recognize the scale Diamond works at and I know some of the inefficiencies they have are simply not curable.  Diamond accepts damage reports, overship and undership reports, and so forth, and usually takes corrective action, though it takes extra time, labor, and attention to report the problem and then to babysit incoming orders to make sure the problem got taken care of.  Multiply that by the total number of problems and it becomes evident why many comic stores just write off such losses in the margins.  And yet again, this is another huge part of carrying the comics category where massive, scaled, laser-focused stores and chains have a substantial economic advantage over small hybrid stores and store groupings like DSG.  On the game side of the trade, there's a lot of talk lately that tiny stores and massive stores (or chains) are positioned to survive in a way that midrange "Mario" stores are not.  It appears this may be true in comic retail as well.

In the wake of the massive Hastings bankruptcy, Diamond reportedly tightened credit terms across its account base.  I can only repeat this as hearsay as our account has not seen any changes or adjustments in as long as I can remember.

Diamond is not enough of an obstacle by itself to make a store want to get out of comics.  They do enough right for the category to function, and enough wrong to make it treacherous for those who are not adept.  They are a company run by humans, and humans are fallible.  Diamond is in many respects like a bull.  It's going to do largely what it wants, and you can predict some of that based on how bulls tend to behave.  A bull is indifferent to your personal needs or preferences.  It's up to you not to get gored or trampled by the bull if it wanders your way.  If you can "manage" the bull well enough, it may produce good results with your cows.

Marvel's Social Justice Agenda
I have heard Marvel's current content called this, and in truth I believe it is a misdiagnosis as the cause of the downturn in Marvel sales.  The raw demographic trends are numbers that do not lie.  The Millennial generation is one-third nonwhite.  Its successor, Generation Z, is expected to be even more nonwhite as its numbers and statistics solidify.  Gender norms have liberalized to an unprecedented degree in western culture today, even in more conservative demographic areas, compared to even only a decade or two ago.  The vast ocean of potential readership growth is a diverse one, and to engage that audience, stories must depict a world in which a diverse society exists -- including protagonists and antagonists.

Setting and character identity is not the problem.  Story is the problem, and more specifically story delivery is the problem.  A certain amount of writing hackery is accepted in comics due to ever-tightening deadlines forcing writers to do some reaching at times they might otherwise have reworked a plot point.  But overall the writers understand story structure, at least once they reach employment with the House of Mouse.  They know what story beats go where to make a formula work.  Thus, even a slipshod plot is going to be engaging if delivered coherently.  And that is where Marvel is off its game right now.  Working so many event sequences, crossover sequences, and subsets into the line-up, a line-up that keeps getting reboots and new #1 issues, makes a reader's or collector's attempt to follow what the hell is going on into an exercise in futility.  At this rate just start calling each reboot Season 2017 Episode 01 or something.

DC's Relentless Ratchet
Meanwhile DC is trying to entertain us at such breakneck pace I wonder when we'll ever have time to slow down and find out what happened in the story.  The two-week issue cadence has simply been too much for our boxholders.  I can see the business case for it.  The incremental production delta is probably extremely small for two issues in a month versus one.  It allows an effective monthly cover price of $5.98 without DC having to come right out and say it.  The incremental receiving and resale delta is significant, it's about the same as simply doubling the title count.  More work for us, for less gross and net per tree corpse sold.  I'm not sure we all recognized from the get-go that the negative effects would fall almost entirely on the retail tier, but that is how it went.

Story still trumps all.  Ultimately, if the content had held up, we all would have shut our mouths and sold dem books.  Star Wars and Darth Vader pushed a lot of content in 2015 and the reader public was like Billy Idol, it just wanted more, more, more.  We're treadmill-weary of DC Rebirth and the two-week issue cadence because the stories aren't resonating enough to pack an emotional punch.

Rising Costs of Business
This was the last straw, essentially, given the high labor load for comics as a category and Arizona's 20% increase in minimum wage due to take effect at the end of the month.  The minimum wage increases another 20% over two years.  I do not believe that a hybrid store can pay $12-$14 per hour for employees to work on comics, the end.  (Keep in mind about half that much again is eaten up in payroll taxes and administrative costs and fees on top of the hourly salary we pay.)

I think a cost per hour in the teens of dollars for labor is beyond what the product characteristics and value equation can support.  I think the evidence is on my side, with comic stores in $15/hour minimum wage localities forced to resort to digital panhandling to survive.  Maybe later in the I-hope-it-does future where a higher minimum wage has lifted recreational spending across the table.  But not now, and not for a while, and while I usually think long-term, I work in the now and the near while.

I fully expected a higher minimum wage to arrive, as I've written before on this blog.  I expected it to be the edict of a President Hillary, not the result of an Arizona voter initiative, but here we are.  My staff generally is diligent and industrious and is well worth paying above the minimum, but now that baseline has shot up a substantial amount.  It's a reality of the money not being there, or if it is there, taking so much from the bottom line that continuing to operate represents a poor investment, a poor use of capital.

I have been hedging everywhere I can toward lightening the labor load and reducing the service mix of DSG, such as with the installation of a kiosk and mirrored web store for TCG singles shopping, and moving away from the board game category where so much content depends on being hand-sold.  Comics requires not only meticulous and extensive ingestion of incoming orders, but also meticulous and extensive monitoring of subscriptions and customer accounts.  My media manager, Dustin, is an expert's own expert at doing this because of his experience managing a ledger of student accounts as an college academic counselor.  You might say DSG had the best possible personnel in place to make this work and it still gradually metastasized to the point where it simply required too much labor relative to its net sales.

Tree Corpse Media Won't "Die"
Comic books as an art form and the intellectual property based on comic stories are not going away.  They are too significant a part of our culture and the humanities of our times.  They will be studied for centuries.  They have existed since cuneiform and hieroglyphics.  Comics aren't going to "die."

Four-dollar (ish) limited prints of artwork on pressed barkskin to the tune of twenty pages?  That "comic magazine" will "die" in that it will probably diminish in every meaningful market respect.  It's gross indulgence.  I don't have a problem with gross indulgence, I'm a guy who modified his Nintendo 64 so it would output a 240p RGB signal directly from the VDAC chip through a THS7314 amplification chip onto a SCART adapter connected to a PVM medical monitor, because the resulting image looks more authentic.  But it absolutely is gross indulgence, and let's not kid ourselves, that's where we are with comic magazines.  In scathing self-reflection we must concede that we're really not that different from the hipster buying artisanal dog treats at this point.

Trade paperbacks?  Don't make me laugh.  If Amazon and Barnes & Noble don't get those sales offering them at roughly our cost, Kindle and iBooks and whatever other electronic delivery platforms will.  Heck, I have TPBs via iBooks.  And I own a comic book store.  Just as I think jukeboxes are cool as hell but I no longer use physical media to play music, we will find that obsolescence will eventually do its thing, and that the comic magazine will hold on as an artifact, but ultimately become a market afterthought.  Just as non-comic magazines have.  And books.

But comics won't die.  I can buy a 33rpm vinyl LP full of music right now, today, from a respectable variety of sources local and virtual, despite the product being, again, gross indulgence, obsolete and unnecessary.  It's a heritage art form now.  And as it is such, so also as such are comics unto us.

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