Advanced Television

Entertainment trade body urges HMV survival

January 14, 2019

By Colin Mann

Industry trade body the British Association for Screen Entertainment (BASE) has responded to the news that UK entertainment retailer HMV has entered administration for the second time in six years, listing five reasons that point out the importance to the sector of its continued existence:

  1. The physical disc market is more resilient than headlines suggest.

Statistics widely reported in the coverage of HMV’s fall into administration claimed that the DVD market “fell by over 30 per cent compared to the previous year”. This was based on comparing a single week’s sales to the previous year in which the highly-anticipated Dunkirk was released, whereas there was no comparable release in the same week in 2018.

The Disc market at the time of HMV falling in to administration was in fact down just 17 per cent year on year (consumer spend), however physical content is still a key driver of the home entertainment market with 59 per cent share of transactional spend, and the success of the top 10 best-selling film titles is still largely driven by disc sales. In addition to blockbuster hits, HMV is a key player in physical sales across TV, comedy and special interest genres, allowing consumers to browse the remarkable breadth and depth of titles showcased in-store.

Standout titles consistently achieve great DVD sales results; in December, Mamma Mia! Here We Go Again sold over 1 million DVDs in less than a month, the first title to do so in five years since Despicable Me 2 in 2013.

  1. A shopfront offers the customer the chance to browse and discover curated content, with impulse buys generated by browsing making up a significant portion of video sales.

One in five video buyers in the last year were pure impulse buyers, contributing £70 million to the market in the last year alone. HMV has led the pack across entertainment retailers, with 30 per cent of pure impulse buyers purchasing at HMV stores, thanks to browsing the wide range of content available.

Kantar Worldpanel reports that in-store sales currently account for at least 60 per cent of all spend over the year, and research conducted by Vista finds that 81 per cent of UK consumers continue to see the physical store as vital to the shopping experience, highlighting the impact an absence of HMV would have on the industry.

  1. 4K sales are growing, now representing 13 per cent of Blu-ray sales, and the Blu-ray format accounting for 24.3 per cent of total physical disc market value.

Consumers remain driven to physical disc when seeking the highest quality and the 4K format is excelling, now accounting for 13 per cent of all Blu-ray sales. The potential customer base for 4K content is also growing, with Futuresource Consulting estimating a UHD TV installed base of 8.5 million and 2.2 million UHD capable Blu-ray players across the UK at the end of 2018.

The growth of 4K within the market has helped increase the average price paid for a Blu-ray up to £14.21, a year-on-year increase of the average Blu-ray selling price of 5.3 per cent, attesting to the fact that consumers are willing to invest more in a high-quality home entertainment experience.

The 4K format, however, is particularly reliant on in-store sales, with 41 per cent of shoppers going to a store specifically just to buy 4K Blu-ray editions, vs. 27 per cent across the whole Blu-ray format.

  1. Discs continue to have universal appeal with UK audiences; one in five 16-24 year olds purchased a disc in 2018.

Despite reports that the younger generation opt solely for digital and streaming services, young people still buy video content on physical formats. According to Kantar Worldpanel, 18.4 per cent of 16-24 year olds bought a physical disc last year and 16-25 year olds account for 11 per cent of all physical disc shoppers, which is flat year on year.

The rise of streaming services has been well-documented, but it is important to consider the multi-format nature of video consumption, with consumers harnessing the unique assets of each method of accessing content to suit a variety of occasions.

  1. Since the news of HMV’s appointment of administrators broke, there has been a groundswell of affection for the store across social media and via think pieces.

Personal accounts of outstanding service, recommendations from knowledgeable staff members leading to new favourites in music and film, as well as accidental finds in the store’s extensive catalogue highlight the true value of HMV, with experiences that cannot be replicated via online purchasing.

“Impulse purchases add significant value to the physical market, and HMV, accounting for one in three impulse entertainment buys, plays a huge role,” advised Ian Foster, Managing Director, NBCUniversal. “For this, and many other reasons, HMV’s place on the high street is vital for the category and we are very keen to see a positive outcome.”

“HMV has for many years been at the heart of the physical entertainment market’s DNA; the depth of range, level of service and knowledge of staff is phenomenal,” added Robert Callow, Director, Spirit Entertainment. “In a declining market, HMV showed growth for Spirit partners in the last 12 months, such as ITV and Acorn, by offering the consumer an opportunity to browse their vast catalogues.”

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