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Games Poised to Overtake Music at HMV
By Tom Ivan
September 9, 2008
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"The fact is, the market is moving away from music — so we are giving more space in our stores to games"
The chief executive of entertainment retailer HMV has said that games could overtake music as the company’s biggest earner within the next year.
Simon Fox told The Sun that he expects music to account for just a quarter of HMV’s sales in the near future, while videogames, which currently account for 19 percent of total sales, are forecast to grow rapidly.
“Within the next 12 to 18 months, it’s possible games will be bigger than music for us,” Fox said.
“Music is in our DNA and we are totally committed to it. But the fact is, the market is moving away from music — so we are giving more space in our stores to games.”
Earlier this week HMV reported like-for-like sales growth of 4.3 percent for the 18 weeks ended August 30, attributing the growth to the its ‘strategic initiatives to increase the mix of games and technology’.
“In games, we grew by just over 50 percent, ahead of the market. And looking forward to Christmas, Wii Fit will continue to do well, FIFA 09 will be huge, as will Gears of War, Guitar Hero and Rock Band," Fox added.
To suggest that games are going to overtake music is a statement that should be weighed carefully. Is the data for this coming from a growth in wholesale or in retail? If wholesale game units or dollars are outpacing music, then that is quite remarkable. However, if the measurement is being done in retail, this is not a surprise since most of the industry retail profit is based upon "pawn" sales or reselling used games. I suspect that sales are based upon retail and their incredible profitability that comes from purchasing games at extremely low costs, then reselling it at more than a 200% or more profit. This in and of itself would explain the hype in game stores.
"...the market is moving away from music." Err, no it isn't. The market is moving away from buying music in shops, and shifting forwards downloads via, for example, iTunes. It's therefore a bit of a no brainer to say that sales of videogames will 'overtake' music.
One day all videogames will be available for download and there will be no need whatsoever for music shops. They will then be forced to close, with the empty units being replaced with 'trendy coffee shops.'
Yahoo.
"...so we are giving more space in our stores to games.” That is true. I went into HMV in Aylesbury the other day and nearly one complete wall was lined with Wii games.