Friday, February 26, 2010

Coming demise of HMV

Actually, what I’m trying to say here is not just for HMV, but stores that similar to HMV that sell the same products. I predict that these kinds of store would most likely go out of business in probably next 5 years. Don’t get me wrong that I don’t like them. In fact, as a fan of music, I love HMV and its peers (like Virgin Records, Amoeba, etc) very much. However, as time changes, so do these stores. I remember when I was in college; there were Tower Records, HMV, and Newbury’s Comics in my town. I loved them all and visited them very often. There were some differences among them, especially for Newbury’s Comics that carried comic books, however, what I was attracted by them were the wide range of selection of music. At the end of the day, they are business and survive on profit. Tower Records was folded few years back. HMV still survives but hardly strives these days.

I visited one local HMV store last week. I don’t go there as often as before, but each time I went there, I found them getting more and more diverse in terms of product coverage. Currently, I can basically group their products into 5 zones: Music, Movies, Games, Printed Materials, and Miscellaneous merchandizes. As I can see, they do diversify in order to survive. Nevertheless, I’m not optimistic. Out of those 5 zones of products, I think majority of them will be folded. Here is why I think they will.

Music – It basically divides into 2 sub-zones: Classical, Jazz + New Age, and all the rest. In terms of format, they have CDs and Vinyl. I think Classical and Jazz lovers would still support CDs as those fans are more affluent and demanding on their musical equipments. Therefore, they will still stubbornly stick to SACD or that sort of format in order to ‘enjoy’ better sound. However, the sales for those records are dwindling for years. I don’t think they would be strong enough to support the store to continue in current scale. It is because all the other genres of music will be killed by digital downloads, aka iTunes. CDs will die in this decade, I mean new CD release as a major format of music distribution. Certainly, people, me including, will still keep the collection we had, but new consumption will fall off the cliff to a point that large stores will not survive if they rely on selling this format. Just look at cassette’s fate! For vinyl, it is already a niche for DJs, clubbing kids or some oldies lovers. I can see that SACD would go down the same route.

Movies – DVDs and Blurays will be killed by digital distribution. With the continue growth in bandwidth and storage, and the increasingly convenience of download and streaming. Discs will become obsolete. DVDs will go the same route of CD, and Bluray will have even worse fate than vinyl. Cos, the criticality of movie ‘nuts’ is the resolution of the graphic and the sound, both of them can be handled by bandwidth. Bluray doesn’t offer any particular advantage in that regard. So, the nails of coffin of discs will be hammered without doubt in my mind.

Games – HMV sold both consoles and games. Consoles will survive for another decade or so, but games will go as consoles further enhance. I don’t care it is PS3, PSP, Xbox, NDS or Wii, all games will be distributed by download. Gamers don’t miss the physical medium of games. They just want games. In fact, they have been playing online games like WOW for years. Also, as Apple’s App Store has shown, people love download games if you can make the distribution so seamless. So, physical game sellers will die as well. Stores can’t live on selling consoles only.

Printed Materials – Magazines and popular books. Besides games, HMV has an expanded section for selling them. However, with the booming of digital books starting these 2 years, printed materials would not have a long future, at least not for popular books and magazines. So, what’s left? HMV will not become an antique or second hand bookstore! Selling poster only? No kidding?

Miscellaneous merchandizes – HMV also sells T-shirts, headphones, and that sort of things. Yes, they won’t be replaced by any digital things, but…..

…if 4 out of 5 categories of products that they are carrying are with doom future, how can stores like HMV survive? Their brand may remain in the virtual world, fighting a losing battle against Apple, Google, Amazon, etc,. From my point of view, sadly, their shops will be closed for sure.

It will become just another victim of technology development. The bottom-line is that we will still be able to enjoy music, movie and reading in future, just not the same way we have been consuming them as before.

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