The comic world was full of excitement and nervousness when it was announced last week that the tech giant Amazon would be purchasing digital comic book leader comiXology the details of which have not been revealed. In general the public reaction by the comic industry has been positive. The Beat has a nice roundup of the various articles taking on the deal. While the deal won’t be final until June, I decided to put on my thinking cap and speculate what the actual impact of the deal might mean for the companies and why, in my opinion, this is a good thing for Amazon, comiXology, and the comic industry as a whole.
The rumor of comiXology being bought out has lingered for quite a while in comic knitting circles, but in general rumors of company buy-outs, mergers, whatever, is often speculation and wishful thinking. In the tech world, this is just another acquisition for the giant Amazon diversifying their portfolio in what they have their hands in. Many have pointed out the many of the contracts between comic publishers and comiXology would be expiring over the next year or two, and depending how those deals go, it’s a roll of the dice as what comiXology’s position to sell would be. Overall, the company announced a healthy $70 million in sales in 2012 and place fifth in global revenue for the Google Play and iOS platforms according to App Annie, a website that tracks online applications. Take the healthy revenue, dominance in the digital comic arena, its guided view technology, and you can see why the company was ripe for being bought.
Below I’ve broken down what I think this actually means and what we can expect from the deal.
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Why did Amazon jump at the chance?
Amazon is diversifying what it provides as services and goods. The tech giant moved into physical goods like their Kindle readers and the soon to be launched Amazon phone. The company bought Zappos partially due to it’s amazing delivery of goods. Amazon has their cloud service discussed further below. They also have moved into original programming and video streaming with their push of Amazon Prime among other things. They even have a comic company, though that hasn’t really taken off.
If we think about company’s making purchases to help strengthen them in an area they’re weak, comiXology absolutely helps in numerous ways. Here’s some of them.
Kindle and upcoming Amazon phone
The Kindle comic experience is generally lackluster compared to comiXology. It might be a bit, but it’s almost a guarantee that comiXology’s system and guided view will become the default reader for Amazon products. Expect the comiXology app to be preloaded on the Kindle and upcoming Amazon phone allowing individuals to immediately jump in and start reading. In fact, I think Amazon will be intelligent enough to pre-load their comics so customers will be able to have the experience immediately at no cost. The company can now provide a top notch comic experience right away with just a few taps of the finger.
Amazon can focus its comic efforts elsewhere. ComiXology becoming the default service for their product allows them to have one division totally focused on that experience, a division that has show they’re the best there is at what they do currently. Expect comiXology’s Guided View to become the Amazon standard for comics and graphic novels.
Expand the Kindle Female User Base
The Kindle is a solid seller, and Amazon is smart enough to know by subsidizing the cost (I just got an email for a nice discount on one as an example) they are able to make up the profits later by selling content. The Kindle though has a pretty heavy female base from the digging I’ve done. According to Facebook statistics the Kindle likes are 64.6% female. ComiXology’s user base is heavily male in comparison, though making up ground with women.
Of buyers new to ComiXology in the last three months, 20% are women. That’s up from less than 5% when they started the app, and it’s a number that Steinberger says is changing rapidly.
Give comic fans a device and platform that provides and experience unlike any other, and you’ll move some hardware. If you’re looking to diversify the Kindle user base, comic fans are a nice target audience to go with. Make it impressive enough… well we’ve seen how geeks evangelize things they like.
Data
Amazon is a leader in the use of consumer data. I’ll discuss this more below, but with comiXology Amazon gets the purchasing data the company has. That allows Amazon to learn even more about their current clients and the purchasing behavior of comic fans. Consumer data is gold in the right hands.
Amazon Cloud/Web Service
This is one I fully expect to be a high priority for both comiXology and Amazon. You might know Amazon from the web store where you can pretty much find anything, but one of Amazon’s biggest businesses is their web/cloud services. The easiest way to explain it is Amazon is one of the kings of website hosting, cloud computing, content delivery, application services and more. Many of the websites you visit every day, the applications you use, are hosted by Amazon’s services. While many companies are able to implement their use of this service well on their end, there’s nothing like having folks on the inside to help. When it comes to staffing changes, I think Amazon would likely have some staff help make sure comiXology is leveraging the full power of Amazon’s cloud. This deal allows comiXology to gain expertise that’s a hot commodity in the tech industry.
For us users, it means better reliability and possibly better download speeds and even some improvement in the storage of comics themselves. I’d think we’d see a smoother experience, but the changes might be too subtle for individuals to notice.
The above lays out some of the reasons it was intelligent for this deal to go down. Below are my other predictions concerning it.
ComiXology Remains Independent
Amazon likes success, all businesses do, it’s their goal, to make a profit. As long as comiXology continues to succeed, expect the company to remain pretty independent from Amazon itself. There’ll be some integration, and expertise Amazon will provide, but I expect that like Zappos, and Audible (two companies purchased by Amazon) at most we’ll see an Amazon logo placed somewhere on the comiXology website and possibly the app itself. If it’s working, why change it?
Amazon Log In (aka one log in to rule them all)
When it comes to changes for the customers, this is the one I expect we’ll notice the most, and also one of the least biggest of deals. I fully expect at some point the log in for Amazon and comiXology will be integrated so that you’ll be able to use one account to log into both. To me that’s great, it’s one less password I need to worry about.
Leveraging Data
As I stated above, data is gold in the right hands. Think about your visits to Amazon, and the emails they send, and how they’re tailored to you. You might not notice this at all, but that’s part of the point of it all. By using data, you can better deliver items individuals are more likely to purchase. Visiting Amazon is different for everyone. The website will show you items tailored to you based on your past purchases and search history. If you do some searches or abandon an item in your cart, Amazon will follow up days later possibly giving you a deal.
Right now the comiXology website is pretty much the same for everyone. The layout is static, the comics shown consistent. Now take Amazon’s power to deliver tailored experiences, add in comiXology’s data, some changes to the website, email program, and the app, and you’ll be shown comics you’re more likely to purchase as a consumer (and you most likely will). Sales increase. Efficiency increases. A better user experience is had. Welcome to modern day marketing and sales.
On top of this, being able to market comic books for folks who might be interested in similar subjects in other media is huge. Buy a Spider-Man toy or movie? Get the comic advertised too. The cross marketing opportunity to endless and can only grow.
Amazon Prime Integration
Amazon wants to make it’s prime program as valuable and as good as a deal as possible. It recently raised the rates by a hefty amount, but when you compare it to the cost of a service like Netflix, Amazon provides a better deal because you not only can stream video, and get original programming, but you also get “free” shipping for a lot of items. Add in comiXology’s service and you get an even better deal. Out of everything this is the one I expect the least as it would involve some impressive deals with comic publishers. If it happens, expect it years down the road when Amazon has shown that it’s a good business partner for the industry.
Buy the Physical Product, Get the Digital Version
One of the coolest things to happen to Amazon is the ability to get a digital copy of the physical cd or book you purchase. Some times this is a free addition, some times you pay a little more. I fully expect this to happen as comic companies like Top Shelf are already participating. Buy a graphic novel or a trade paperback and get the digital version too? It’s a winning scenario for everyone (except maybe brick and mortar stores).
ComiXology remains platform agnostic
ComiXology is consistently a top grossing app on iOS and Google Play. Amazon cutting off either of those platforms is throwing money away, money that helped the company turn into a $70 million dollar business. While Amazon’s relationship with the two other platforms is competitive, to suddenly cut off the comics platform on either service is short sighted, and would impact profitability. You don’t buy a company like this to make it lose money. Both iOS and Google Play are solid revenue streams, and Amazon has to enjoy making money off of their competition’s user base.
And that wraps up what I expect for this deal. What are your predictions and thoughts about the purchase?
