HMV: The Entertainment Superbrand?

HMV chief exec Simon Fox says he wants to transform the British music and film retailer into an entertainment superbrand.

He’s confident his company is on its way to having a 360-degree business model similar to those becoming increasingly popular with major record companies. This would include its core business of selling CDs and DVDs as well as live performances, ticket sales, merchandise – particularly related gadgets such as headphones and ebooks – and even music-related fashion.

“We laid out a plan three years ago and pretty much everything we put in it has come to pass,” Fox told The Guardian. “In what is clearly a tough market we’ve achieved what we set out to do.”

HMV paid about £46 million in February for MAMA Group, the multi-faceted independent music company that owns venues and has an artist management company with a roster that includes Kaiser Chiefs, Franz Ferdinand and The Cribs.

HMV has also started a couple of festivals. In February it staged The Next Big Thing, a joint-venture with MAMA set up before the buyout. Since the HMV takeover, MAMA has also introduced High Voltage, which attracted nearly 20,000 per day to London’s Victoria Park July 24-25.

Fox’s other moves have included introducing the Pure HMV loyalty card scheme, taking a 50 percent stake in online music store 7digital and even opening a pilot HMV Curzon-branded three-screen digital cinema in Wimbledon.

Music sales including digital tracks are still a core business that brings in 22 percent of revenues, but that’s down from 31 percent in 2007. DVDs and Blu-ray are now the top-earner, with 34 percent of sales.

HMV’s share price has dropped 50 percent in the past 12 months, down to 51 pence in the middle of June, largely because the London Stock Exchange is nervous about the effect piracy is having on music sales.

Although UK sales are down 8.5 percent and the home entertainment market is down 10 percent, the company recently announced profits up 18 percent year-on-year and the shares have since recovered to 61.25 pence.

Its market position is also stronger, having come through a downturn that saw off three quarters of the independent music stores and national retailers such as Zavvi and Woolworths.

“Look around the world: it is very, very sad that there are very few entertainment retailers left,” Fox said. “The trends are there for all to see. We knew we had to reinvent the business, we knew we had to do something.”