By Porter Anderson, Editor-in-Chief | @Porter_Anderson
‘This Is a Business That Rewards Scale’On Sunday (December 15), Rakuten Kobo will reach its 10th anniversary.
The Canadian seller of ebooks, audiobooks, and e-reading devices might appear to be taking the big moment quietly, but as Publishing Perspectives finds in a year-end interview with CEO Michael Tamblyn, he’s put a lot of thought into how his Toronto-based digital retail company has kept moving.
In any week, Tamblyn says, Kobo will deliver ebooks to some 150 countries. “Over the course of a year,” he says, “we’ll hit all the countries the United Nations recognizes and a few others.”
The operation also has localized merchandizing and/or other partnerships in some 25 countries. The catalogue available through the retailer comes in at between 5 and 6 million titles.
At the end of November, another new market was opened: Vincent Chang in the Singapore Straits Times welcomed the introduction of Kobo’s e-readers to the island nation, the devices priced between 199 and 279 Singapore dollars (between US$147 and $206). The eight-inch HD Kobo Forma with Dropbox is the leading model and is advertised as having “waterproof reliability, the choice of landscape or portrait mode, and the expanded access of book borrowing. Storage size available in 8GB and 32GB.”
And that factor in itself—leading with a line of e-reading devices—is a clue to how Kobo has become the most purposefully internationalized player in the digital reading industry.
“It’s been really interesting too look back over the development of the company, you know,” Tamblyn says, “to look at how we achieved the position that we have and what were some of the decisions we’ve made that resulted in that. Out of all the startups that we were on the starting line with in 2009, why are we still standing? So many others have gone away. And we need to take that point of retrospective as we get ready for the next 10 years.
“One of the things we’ve learned is that this is a business that rewards scale,” he says. “It definitely helps to be one of the big players in the space. But it also rewards diversification.
“We see a third of our sales coming from Asia, a third from the Americas, north and south, and a third from Europe.”Michael Tamblyn, Rakuten Kobo
“We see a third of our sales coming from Asia, a third from the Americas, north and south, and a third from Europe.
“We do see ups and downs in individual territories,” Tamblyn says. “We see individual markets peak and then plateau. We see other ones start slowly and then accelerate. And spreading ourselves out—realizing that this is a long game as opposed to something to be won in a couple of years—has given us a lot of resilience and diversification. And that’s allowed us to keep going when a lot of others didn’t find themselves able to get that critical mass.”
As part of its anniversary observances, the company has had an interactive timeline graphic created, a handy way to look at some of the high points. Little rocket icons indicate launches of one product or initiative, top-selling ebooks of each year are included along the way, and the reader/consumer base is charted growing, from the first million between 2010 and 2011. The total as this year comes to an end: 45 million.
Rakuten’s acquisition of Kobo was announced late in 2011 and was reportedly a $315 million cash transaction. Press reports such as this one by J. Odell at VentureBeat described the company as an e-reader manufacturer and—in the type of small irony that only publishing people might note—listed its competitors as Barnes & Noble’s Nook first and “Amazon’s Kindle product lines” second.
In terms of those devices, the first e-reader went out in 2010; Kobo Glo was launched in 2012, the same year that the company’s self-publishing writers’ platform, Kobo Writing Life, was kicked off–when EL James’ originally self-published fan-fiction Fifty Shades of Gray was the top selling ebook at Kobo.
On the graphic, partnerships and international launches are highlighted in Italy (2012), as are introductions of the Aura and Arc e-readers (2013); the partnership in the Netherlands with bol.com (2014); Kobo’s arrival in the Mexican market (2015); launches in Spain and Turkey (2016); the tech partnership with the German-born Tolino (2017); the opening of Kobo Audiobooks (also 2017); launches of the Forma, the Rakuten OverDrive feature, and the Walmart partnership (2018); and this year’s highlights including the release of the Kobo Libra H2O device.
Walmart: Where Shoppers ‘Are Showing Up’
The January 2018 announcement of Kobo’s partnership with Walmart in the United States drew widespread attention in the world industry.
Already well recognized for its emphasis on international expansion and partnerships, Tamblyn had taken a turn into a market he’d effectively conceded years earlier to Amazon’s dominance. What made the Walmart arrangement clever, of course, was that it integrated the Kobo offer into Walmart’s growing online retail effort, meaning that Kobo had landed, effectively, as the big-box retailer’s in-house vendor in the field.
Walmart had the same reason Kobo did to want to build its online presence in the American market: Amazon.
“Walmart, when you look across its entire portfolio of e-commerce,” Tamblyn says in his interview, “is really pushing hard on being that strong competitor in the US. They’ve been a great partner to work with, and there’s still a lot more we can do in that channel. So really this past year has just been getting us started.”
But asked if the success of the Walmart partnership doesn’t turn on the fact that Kobo can ride the energy of that huge company’s online expansion, Tamblyn has another approach.
“There were a couple of pieces” to the arrangement, he says.
“One is that we want to be where readers are, where books are getting purchased, where people are showing up and making shopping decisions about reading—so we can introduce ebooks and audiobooks to them. And we can do that in a place where they’re already showing up for that reading experience every day.
“So that has us looking at each individual market in terms of where is there a great retailer who has access to that customer in a privileged way. At the same time, who sees themselves as being in a competitive battle with those big ecosystem players—Amazon, Google, Apple—and wants to hold on to that customer and retain that reading relationship with them over time?
“One of the things we’ve become good at over the last 10 years is finding readers wherever they are.”Michael Tamblyn, Rakuten Kobo
“So whether it’s Walmart in the States or FNAC in France or the Tolino Alliance through Germany, these are all retailers who have said, ‘Yes, ebooks have to be a part of our strategy if we want to be able to keep that customer and not have to pull into some other retailer’s ecosystem.’ Then we get to work together to figure out who those customers are, introduce them to ebooks, and put it into the context of the current reading they already do.”
While the United States and United Kingdom are the leading markets for Amazon, Tamblyn and his team, he says, find that Seattle’s dominance is much less potent in much of the rest of the world. “And when you look at sectors generally, you look at the total amount of retail spend relative to e-commerce spend. E-commerce is still this small fraction of the total amount of money flowing through stores” in much of the world marketplace.
“So one of the things we’ve become good at over the last 10 years,” Tamblyn says, “is finding readers wherever they are. Lots of people still walk into bookstores. Can we be there to show them ebooks as an option, put an e-reader into their hands so that we give them that pause of consideration?”
Tamblyn sees Kobo customers as people who achieve “a better reading life” with his products. And that, it turns out, is behind his understanding of the devices as being so critical.
The E-Reader: Not a Gateway Device
Going back to Chang’s review of the Forma in that Singapore Straits Times article, the critic ends with a couple of lines that might warm Tamblyn’s heart.
“It seems strange to recommend an ebook reader,” Chang writes, “when it’s so much easier to read on multiple devices using a mobile app like Libby [from OverDrive], which can even synchronize your ebook progress across devices. But there’s something to be said for a dedicated reading device that ensures you’re focused solely on reading, without distractions from messages and emails from a phone.”
“Where we’ve been able to differentiate ourselves, is how close can we get to that perfect experience for someone who reads a lot?”Michael Tamblyn, Rakuten Kobo
In the major English-language markets, e-reading has become almost a creature of digital-device ubiquity. The app is the pervasive distribution vehicle. While the Kindle ecosystem of course still has an aggressively marketed suite of dedicated e-reading devices, the trade in content itself is leveraged on the omnipresence of smart devices and their apps.
“When a lot of us started in the e-reader space, say in 2009, 2010,” Tamblyn says, “there was a sense that maybe e-readers were a transitional technology and that within a couple of years, everyone would have a smartphone and a tablet and all e-reading would converge on those devices.
“But what we found is that if you’re someone who really loves reading, who has books at the center of your life—let’s say you’re reading two books a week—then you tend to want to find an experience that’s well-optimized to that activity, in the same way that if you love movies or sports, you’re going to buy the best 4K or 8K television.
“Where we’ve been able to differentiate ourselves, is in taking that as our focus for how we develop the e-readers. How close can we get to that perfect experience for someone who reads a lot? We’re constantly asking those customers, ‘What do you want to see next? What’s going to make reading on a device better for you?’ And that then becomes the driver for our next cycle of product development.
“And we’ve been able to bring that to our partners like the Tolino, as well, to help them be competitive in the game. Most importantly, it’s meant that we’ve been able to keep that solid core of really valuable customers with us over time.
“Is this a question of markets?” Tamblyn asks himself. “A little bit, in that from territory to territory, the mix of apps and devices changes a lot. We’re very active with a lot of growth in Japan, for example, thanks to our parent company,” Tokyo-based Rakuten. “And Japan’s almost entirely a smartphone market. But we see a ton of growth in devices in places like Germany and the Netherlands and France and Italy. Established markets like the US, Canada, the UK, are much more likely to be balanced between the two.
“But if you’re among those people who are constant readers, we find that you’re going to be looking for a great experience from a dedicated device. And we want to be there.”
We’ll embed for you below Kobo’s latest device-promotional video so you can look at the level of design and high-concept marketing the company maintains in the field, clearly helping this 10-year-old startup maintain its staying power.
“The devices have meant that we’ve been able to inject innovation into the space,” Michael Tamblyn says. “And then some of our competitors have flattered us by following us. Which is always great.”