Kobo gets a grip on German ebook market with Tolino takeover

Ebook retailer Kobo has made a significant move in the European market with the takeover of Tolino, which is the leading ebook marketplace in Germany.

Rakuten, the Japanese multinational conglomerate which owns Kobo, says the deal should be completed by the end of January, subject to German regulatory approval, and Tolino will remain as the operation’s brand in Germany.

Kobo launched an ebook store specifically for the German market in 2011 shortly after Amazon launched its Kindle store in Germany.

Tolino has an interesting set-up as it was a partnership between book retailers Hugendubel, Thalia and Weltbild Deutsche Telekom. Rakuten refers to the takeover deal as acquiring ‘the Tolino technology platform from Deutsche Telekom to become the new technology partner of the Tolino alliance’.

Rakuten Kobo CEO Michael Tamblyn says, “Together with our partners from the German book trade, we intend to continue to enhance the Tolino ecosystem for its many dedicated customers. This acquisition allows us to bring Rakuten Kobo’s experience with collaborating with book retailers around the world to the Tolino alliance. This is the coming together of two strong pure-play ebook platforms, and we look forward to bringing even more capability and competitiveness to the Tolino offering. We look forward to working together as their technology partner to attract even more people from German-speaking countries to digital reading.”

The deal is claimed not to change anything for Kobo or Tolino customers who will see business as usual.

The Tolino brand is backed by an alliance of leading German booksellers Thalia, Weltbild, Hugendubel, Mayersche Buchhandlung and Osiander as well as Libri with around 1,500 linked and independent bookstores across Germany, eBook.de and Deutsche Telekom as the technology and innovation partner.

Since its launch in March 2013, the Tolino alliance has become one of the leading brands for digital reading in the German-speaking world. Internationally, in addition to Austria and Switzerland, Tolino is available in Belgium, Italy and the Netherlands.

Tolino offers a range of e-readers which include an open ecosystem with integrated Tolino cloud, which does not restrict customers to one particular bookseller when buying ebooks.

In spring 2015, Tolino also set up a self-publishing service for indie authors and it is also possible to self-publish with Tolino through distributors such as Draft2digital.

Germany is reckoned to be the second-biggest book market in the world but the ebook sector has been relatively slow to take off and Amazon has faced considerable resistance in the country. However, Germany is still estimated to be the third-biggest ebook market (after the US and the UK).

Tolino and Amazon’s Kindle are both estimated to have around 40% of the German ebook market, so this is one of the few national markets where Amazon has a serious challenge to its dominance.

It’s an interesting move by Kobo but also perhaps a slightly strange one. Kobo, of course, has its own range of e-readers and tablets, so it might see synergies in that area with perhaps its own hardware range being rebranded to replace the Tolino e-readers or maybe even the Tolino range replacing Kobo’s own offerings. There is also the software aspect, with Kobo presumably getting the IP to the Tolino readers and platform but there are bound to be major difficulties in any integration with Kobo devices and online stores.

The deal overall simply sees Kobo taking over from Deutsche Telekom as the platform provider of the organisation rather than being the content provider. There are so many other partners involved that there must be significant income-sharing and dilution, although as many ebooks in Germany are more expensive than in the US and UK there could be more cash to go around.

It also doesn’t appear as if there’s much scope for Kobo to extend the deal into selling content as the whole point of Tolino is to give the German bookstores a stake in the ebook business, so it looks like the takeover is, at least for the time being, purely a technology play.

Tolino success points to potential of territorial pricing for ebooks