My startup tried to solve exactly this problem in the Electronic Design Automation domain. We provided VCS and compare functionality focused on the needs of this industry.

We pivoted. The main issue we faced is the way the electrical engineers work and how difficulty it is to change this. It was incredible hard the explain these people how to properly use a VCS. We focused on a simple interface and tried to optimize on the way electrical engineers work. No chance!

Obviously the same applied to LayerVault [1].

[1] http://thenextweb.com/apps/2015/03/11/layervault-the-version...

Is it because code is text and assets are usually binary? How do you do a diff reliably on a binary file?

That depends on the file type. Several version control clients can already detect image files for example and show a visual diff between revisions. There is still a lot of room for improvement and standardization however.

The main problem is not diff but merge. You currently can't merge changes to images, textures etc. The whole advantage of DVCS like git is that it allows to work in parallel and merge effortlessly. The day we can merge photoshop, maya and 3D studio files central repository for art files will not make sense any more. But that day has not come, yet AFAIK.

What kind of artist work can you practically distribute between multiple people and merge? Most things like this are broken into pieces and each piece is tracked separately and assembled later.

I think this is a big mistake programmers make when trying to create VCS for other industries. A lot other fields with binary files don't care about merge as much. Like electronic design automation: track every part's history and even every module on a board or die layout. But, practically it's difficult to have two people productivly work on the same small piece simultaneously.

[edit] I also think a bunch of the reasons programmers require merge are because code is organized into files. Organization into files is arbitrary and often doesn't correlate particularly well with logical structure.