Leading Questions: A Scrooge McDuck-Sized Vault of Money

This article was originally published at Comics Bulletin on February 25, 2016.

Porpoise

Every two weeks in a new installment of “Leading Questions”, the young, lantern jawed Mark Stack will ask Comics Bulletin’s very own Chase Magnett a question he must answer. However, Mark doesn’t plan on taking it easy on Chase. He’ll be setting him up with questions that are anything but fair and balanced to see how this once overconfident comics critic can make a cogent case for what another one obviously wants to hear.

So without any further ado…

As a person with a degree in economics, can you explain the best case scenario for double-shipping 17 books?

As our friend, the astute and witty Christian Hoffer, pointed out on Twitter, the true best case scenario for DC’s Rebirth initiative would be that Dan DiDio fills a Scrooge McDuck sized vault with money and goes swimming. And that’s what this question really is about because it’s the topic on everyone’s minds until the next hot mess rolls along in comics. I don’t think you’re pondering what would happen if Dark Horse started double shipping all of their titles tomorrow. That’s a good thing too because it would be a very different answer. Comics is a strange place even in the North American market alone and what DC Comics is trying to do is something only two publishers could even attempt. It gives us a little bit of focus, which is nice.

I’ve learned to make a variety of projections in my career outside of comics and the image of DiDio doing the backstroke through gold bullion far exceeds even the most optimistic outcomes for this scenario. That’s not to say that this strategy may not prove to be financially successful for DC Comics; it’s just that there’s not enough money in the comics market to support very much excess anyway. So I’m going to focus on approximating what may be the optimistic projection for this initiative, the best case (but still reasonable) scenario.

However, don’t expect me to give you any numbers or statistics to back much of this up. I’m happy to make educated guesses about the comics market and financial planning, but creating a serious, data-backed hypothesis is something else entirely. Not only would it require information that only Warner Brothers possesses, but it would require a reasonably well-informed perspective on the comics market. I’m here to tell you that’s not happening anytime soon. Comics data is a joke with the best estimates of sales being the woefully under-nuanced sales numbers released by Diamond concerning the direct market. Rather than pretend to have a grasp on something oilier than Hammerhead’s hairdo, I’m going to paint in broad strokes and simply speak from experience and my own knowledge of the marketplace.

DC Comics’ base rate of sale both in terms of dollars and units have been in decline to varying degrees since the enormously successful first wave of New 52 titles launched in 2011. The past year has seen them hit the most notable low points of that period as their summer event “Convergence” flopped and only big releases like The Dark Knight III and its quadrillion* variant covers provided a boost. Sales for flagship titles like Batman and Harley Quinnhave remained steady, but many new concepts underperformed substantially. While series like The Omega Men,Prez, and Midnighter garnered passionate followings and critical praise, they sold very poorly when compared to other Marvel and DC titles. We’re not asking why these series flopped or what has led to the increasingly predictable decline in sales even for A-list characters like Wonder Woman, Superman, and Green Lantern. We’re asking how Rebirth plans to shore up those numbers and save the day along with the jobs of upper management.

I think the key to answering this question is Batman. Isn’t it always? No matter how bad sales have gotten or how much fans have complained about past sales-based initiatives (see: September events, “Convergence”, other assorted terrible comics), Batman has remained the crown jewel of DC’s publication roster, untarnished by whatever else has gone awry. The success of both the main series, primarily created by Scott Snyder and Greg Capullo both of whom are departing soon, as well as its surrounding family of titles has provided some ideas for what works.

I don’t want to understate the role Snyder and Capullo played in the success of Batman. Their run on the series will always be part of the discussion when it comes to iconic interpretations of the character. I don’t want to understate the roles of creative teams on other Bat-books either. Tom King and Tim Seeley made Grayson more successful than it had any right to be, and Cameron Stewart, Babs Tarr, and Brendan Fletcher’s design and style on Batgirlgave it a massive boost. The upturns supported by good creative doesn’t appear to be at the heart of Rebirth though. By its very design bi-weekly shipping does not support artist-driven comics, forcing regular shake ups and compressed deadlines. The best case scenario for this sort of schedule is that an artist will be able to cover each unique story arc in its entirety. We’ve already seen the worst case scenario and it resembles the weekly series likeBatman & Robin Eternal that DC Comics has found sales success with.

What DC is looking to model based on its Bat-books is the resilience of their sales. Before Snyder and Capullo took over Batman, the series was still a high seller. Even during their run when the special September events or fill-in issues would push different creative teams (often featuring a much lower standard of quality), the book still sold. Batman is the most popular character owned by DC Comics and represents their greatest asset: beloved intellectual property.

For some people Batman isn’t a choice amongst hundreds of available comics or even amongst hundred of available superhero comics. Batman isn’t an option; it’s a necessity. For these readers getting Batman isn’t so much like picking up a treat at the grocery store, say ice cream, it’s more like getting a staple, say milk. This isn’t everyBatman reader, but I’d wager it’s a lot of the readership and that’s most likely what DC Comics is wagering as well.

If this feels like I’m about to trick you into learning some economics vocabulary, it’s because I am.

The keyword for this discussion is price elasticity (or, technically, price elasticity of demand). This is essentially a measurement of how much demand for a product changes in response to a change in price. All things being equal when something gets cheaper people by more and when something gets more expensive they buy less. Elasticity looks at how much more or less people buy. When a change in price has a relatively small effect on demand, a good is said to be inelastic. You can think of something like gas as a good example since price fluctuations don’t have proportionate effects on how much people drive. When a change in price has a relatively large effect on demand, it’s said to be elastic. Look at a specific brand of car for an example here. If the Dodge Dart doubled increased 20% in price tomorrow, you’d see a dramatic decrease in people driving them over the next year. This is all a pretty broad generalization, but we can stick to microeconomics 101 here.

My hypothesis is that DC Comics is launching these series under the belief that certain comics, like Batman, are price inelastic. I don’t think they’re wrong either.

DC Comics isn’t increasing the price of each individual pamphlet they sell though. They’re actually decreasing many series from a price point of $3.99 to $2.99 (a 25% decrease) upon the relaunch. That decrease in revenue is shored up by an increase in output though. Since comics rely on sequential, ongoing stories and stores have to order months in advance, the market (that is to say, the orders of direct market stores combined with digital and other small outlets) won’t opt to only order one issue of a series if two are published in a single month. Instead if Batman #5 and #6 are both released in July, their sales are likely to be very close. Double shipping $2.99 titles means that DC is looking to take in $5.98 in revenue from each title being purchased.

That means readers will see an increase in their cost to keep up with Batman’s newest adventures each month too. They may be receiving more pages with double the issues, but that will still require a larger proportion of their comics or entertainment budget. Either they can spend more on comics or choose to focus their purchasing onBatman or an alternative of which there are plenty also at the $2.99 sales point. DC is gambling that the 50% ($3.99 per month to read Batman becomes $5.98) increase won’t drive off a proportionate number of customers. Actually, they’re betting it won’t drive off many at all considering the increased costs of creating and shipping double the number of issues.

I think this is based on a good understanding of the audience that currently buys lots of DC Comics. When you think of superhero and comics fans, a certain stereotype comes to mind. It’s the middle aged guy with loads of long boxes in his basement who will arrive at the comic store every Wednesday to see what happens next, even if they’re immediate response is to complain about it. DC is really hoping that this caricature is true to life because that’s the sort of reader and collector who will buy into this strategy.

Characters like Batman, Superman, Wonder Woman, The Flash, Green Lantern, Green Arrow, Dick Grayson, Barbara Gordon, etc. have loyal fanbases who follow these characters. That’s what makes them DC Comics’ most valuable asset and that’s why this launch of 17 biweekly titles will be focusing on this core set of characters. Cult favorites like The Omega Men and Prez might receive a vocal response, but that’s not being reflected in sales. These flagship characters tend to sell comics no matter what lies between the covers though. They’re a safe bet and one that DC is doubling down on.

If DC is right and a significant proportion of their readership looks at comics featuring these characters, books likeBatman and Justice League, as inelastic goods, then this is a sure fire strategy to start rebuilding their market share. It allows them to lean more heavily on a smaller portion of readers to move units and shell out dollars. Rather than relying on temporary surges from events (e.g. Villain’s Month) or big profile mini-series (e.g. DKIII), they’re looking for a sustainable, reliable stable of comics. These 17 series hopefully represent a much higher average in sales than their current 34 top-selling comics.

There’s a question of what is happening on the backend and what comes next too. Does this mean lower rates for creators in order to afford the marked decrease in price point per issue? Does it mean less of a focus on quality overall? Does it mean less risk taking and pulling back from their currently diverse lineup? I believe the answer to at least two of these three questions is yes, but it’s impossible to know.

It’s also impossible to know how long it will take for the $2.99 price point to move up again, but it’s only a matter of time. No matter how much we may like to shellac and poke fun at the publisher, they’re still run by experienced folks who really want to make a buck. Look over the past five years of DC Comics and you’ll see a series of fluctuations between the $2.99, $3.99, and even $4.99 price points. There’s a lot of data in their possession that we will never see. If you don’t think they were carefully watching what happened when they scaled series like Batmanin the past and Grayson recently up from $2.99 and aren’t using those observations to plan the next year, then you probably aren’t giving them enough credit.

The best-case scenario for Rebirth and double shipping 17 superhero books isn’t about trying to win the market with one grandiose gesture, like the New 52’s short-term success, or trying to duplicate another publisher’s gains, like Divergence’s general failure; it’s about betting on a sure thing. In this case that sure thing is superhero fandom, the folks who show up every week to get the newest dose of their favorite Justice League members no matter how much they love or hate the stories. That’s the foundation for success with this strategy and I expect it will return some much needed gains in the immediate future. The key follow up question is: How long can that sort of success last?

*estimated number

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About chasemagnett

Chase is a mild-mannered finance guy by day and a raving comics fan by night. He has been reading comics for more than half of his life (all 23 years of it). After graduating from the University of Nebraska–Lincoln with degrees in Economics and English, he has continued to research comics while writing articles and reviews online. His favorite superhero is Superman and he'll accept no other answers. Don't ask about his favorite comic unless you're ready to spend a day discussing dozens of different titles.
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