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Time Warner Inc (TWX), AMC Networks Inc (AMCX): How Going Digital Helped the Comic Book Industry Gain Superpowers

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When I returned to San Diego Comic-Con in 2010 after decades away — I’d attended as a fan and collector in the early ’90s — the show I’d remembered as a kid had gone Hollywood.

Movie studios dominated every main-hall presentation. Tens of thousands lined up overnight to see previews of the newest Harry Potter and Twilight films. For Time Warner Inc (NYSE:TWX), Green Lantern promised (and then failed) to give birth to a new DC Cinematic Universe. My old gathering of like-minded fans had exploded into a 130,000-person-strong must-attend media circus for the entertainment elite.

Thousands working their way into San Diego Comic-Con. Source: ABC News.

A surprising origin story
Meanwhile, the business that give birth to Comic-Con was busy being disrupted. Retailers and publishers alike worried that an upstart distributor of digital comic books known as comiXology would undermine sales of their periodical counterparts. The local comics shops I’d frequented as a kid would soon be no more, the doomsayers said.

Boy, were they wrong. Digital’s role in resuscitating the medium was a hot topic at this year’s Comic-Con.

“Digital has not to anyone’s observation pirated the sales of comics. It looks like just the opposite,” said John Jackson Miller, a comic book writer and fiction author who also tracks the industry at his website, The Comics Chronicles. His data shows that unit sales of comics rose 11.4% last year. In dollars, the industry grew almost 15%.

Comic books ordered by comic shops in North America. Source: John Jackson Miller/The Comics Chronicles.

And what about digital? Readers have downloaded 80 million comics since October, when comiXology announced its 100 millionth download. Fans have taken to the format at an astounding pace, says comiXology co-founder and CEO David Steinberger.

“A lot of our business is brand-new business that has never existed,” he said. For readers who were missing issues of their favorite titles and didn’t live near dealers with big boxes of old inventory, “unless it was in trade [paperback], there was just no way to fill in those collections.” That’s all changed thanks to the nearly limitless back-issue bin that is the Web.

For that reason and plenty of others, you might even say digital has been like a superpower transforming what had been the 98-pound weakling comics industry into the muscular titan it is today. TV and movie successes are fueling comic book sales, and vice versa. Take AMC Networks Inc (NASDAQ:AMCX), which is profiting like never before because of its handling of The Walking Dead, a comic book adaptation that rose to become the top-rated scripted show of the fall TV season.

Fans fight off fake zombies at The Walking Dead booth at Comic-Con. Photo credit: Tim Beyers.

How did the naysayers get it so wrong, and what we can learn from the comics book as investors?

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