Despite a year spent weathering the failure of Borders Books, the continuing struggles of physical bookstores in general and weak sales early in the year, Diamond Book Distributors v-p sales and marekting Kuo-yu liang says the year ended strongly for the distributor of graphic novels and pop culture merchandise. International markets in Europe and Asia are doing well, he said, and top properties like Walking Dead, Mass Effect and The Darkness continue to sell well.

Nevertheless Liang said the continuing shift to online purchasing by consumers and the closing of physical stores is robbing the industry of its most important asset—browsing. “We’re losing the ability of consumers to browse and get recommendations,” Liang said, “We spend a lot of time talking about this and trying to work with all kinds of physical stores, not just comics stores. Online is great but we need to help brick and mortar stories stay in business and grow.”

Liang said that 2011 started “bad. Sales were soft, Borders was failing, Waterstones stopped buying, a U.K. wholesaler was on the virge of bankruptcy.” Going forward in 2011, the Borders bankruptcy led to fire sale prices on its books, “and made all the sales data look weird,” he said. But Liang said fourth quarter sales at DBD were “great. Sales were strong in most markets, the U.S., U.K., Canada, Europe and Asia.” Sales of “brand name creators and media tie-ins did well, no surprise there,” Liang said pointing to such properties as the Walking Dead and Transformers. DBD distributes a whole range of pop cultural material and sales of Angry Birds books, cookbooks and role playing games also did well for DBD. “That’s the beauty of a global market,” Liang said, “Somewhere else can help pickup the slack.”

Nevertheless, manga sales in English are still down although the German/European market for manga continues to be strong, he said. Tokopop, which folded over the past year, continues to publish manga in Germany. “Tokyopop’s still going on in Germany and sales are up,” Liang said. He was optimistic about strong brands and some new properties—many driven by the release of related videogames, movies or TV tie-ins—coming in 2012. “Walking Dead continues to be a monster; there’s a new Teenage Mutant Ninja TV show coming and there’s strong demand; Dark Horse has Mass Effect; Top Cow has a new Darkness videogame coming. There’s tremendous demand for these properties all over the world.” (On the other hand one of the DBD’s big selling properties, Antarctic Press’s Diary of a Zombie Kid series, a parody of the mega selling Jeff Kinney Wimpy Kid series, got slapped with a lawsuit and a restraining order charging the publisher with copyright infringement.)

DBD is bullish on the international market, especially the Middle East, which Liang said was a burgeoning market for English language comics and western pop culture merchandise in general. Liang was recounting his visit to the Sharjah International Book Fair in the United Arab Emerates in November. “There are a lot of bookstores in the Middle East, especially in UAE and Dubai,” Liang said. English is the primary language and the region has big stores, “25,000 square foot bookstores,” said Liang. And in a weird twist, apparently chains like Borders and Virgin Megastores still exist in the Middle East—a company that previously licensed the Borders trademark apparently bought the name at auction. Liang said “the stores look just like Borders with same layout and design.” And they also feature feature big displays of Western graphic novels and manga, “152 shelves all full of American comics,” said Liang.

“Nothing will replace Borders,” he said, “we need about 20 new channels each with about 5% of what we’ve lost to make it up.” DBD is also looking to Asia, “China is booming. The Chinese English language book market would be the third largest market in U.S. and its growing,” Liang said.

While DBD’s parent company, Diamond Comics Distributors, the dominant distributor in the comics shop market, launched a digital delivery program that allows physical stores to sell digital downloads, DBD has yet to announce a digital program. “We haven't started a program yet but we expect to announce something soon,” Liang said. “The digital market isn’t going away and we’re trying to make sure that we get it right.”

But Liang said the decline in the number of physical bookstores will be the biggest challenge facing publishers in the new year. Liang is based in Seattle and noted that his local B&N was closing. He’s sending his sales reps to talk with local indies about ways to alert former B&N customers “that they can find their books at these stores. In this market you’ve got to jump on every point. We even talk to supermarkets. It’s hard local work on the ground but it's exciting and this will continue through 2012,” he said.

“We’re very encouraged. The beginning of the 2011 was brutal but it ended well. Next year will be difficult to predict because of the continued effect of on brick and mortar stores or how ebooks will effect print,” he said. “So we’re hedging and focusing on a lot of areas.”