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What HMV's Administration Means For Gamers And The High Street

Where do we go now?

With HMV entering administration we’re faced with the loss of the biggest  high street entertainment retailer in the UK. If the administrators fail to save the company in any capacity then almost 4500 people lose their jobs, and we as consumers lose choice.

HMV has found itself in this situation because of the company’s failure to adapt quickly to an ever changing market. A market that is suffering from a drop in consumer spending with game market spending falling 17% while total entertainment sales fell 12%.

Of course the current financial climate has led to many people, including myself, cutting back on buying entertainment to instead concentrate on the essentials. However, if HMV shuts those numbers could look even worse next year due to a lack of outlets, and awareness of products.


This could become a thing of the past. HMV has always provided plenty of shelf space to games, but has failed to keep up with changing trends as gamers (and music buyers) moved towards digital and rentals.
Let’s first see how the potential loss of HMV affects the consumer. Right now I can count the number of well known entertainment retailers other than HMV on one hand, those being GAME, Blockbuster, Zavvi, Shopto and Amazon.

Play is no longer on that list as it is moving away from the retail business.

What keeps prices low is competition and losing a major competitor may affect prices. With the loss of HMV consumers are down to two big entertainment retailers in town centres, though those who like buying music CDs will have to try and find the rare independent record stores.

Or switch completely to online shopping.

Online shopping is becoming a bigger presence, and many will simply jump to that. Digital downloads are also on the rise, and in 2012 they topped £1bn sales for the first time. However, when it comes to games digital downloads only aren’t always the sensible option. There are download caps to consider, slow internet speeds in some areas and the occasional ludicrous pricing (right now DmC is £49.99 on the PS Store).  You also have to remember that some may not have internet access.

What about the games industry then? The industry spends a lot of money on advertising products but even then the advertising campaigns are almost always for the big blockbusters. Other titles may gain awareness just because a person picked up a case off the shelf and decided to give the game a go. I know I’ve done that with a few titles, and I’m sure others have too.

GAME may fill the gap in raising some awareness but losing HMV means losing a lot of shelf space. With a market that has shrunk, and less outlets for consumers to find products game developers and publishers may think twice about investing in riskier titles, instead going for the safe bets. Lots of games have released with little to no marketing (Singularity springs to mind), and sales really only made because people saw it on shelves and took a chance.

Even then that isn’t enough to recoup losses on some titles.

As members of the games media we can only do so much to bring you, our readers, information about new and interesting titles. Hundreds of titles will fall by the wayside simply because we don’t have the time nor resources to cover them all. If we can’t keep track of all these games then how is the regular consumer going find new titles without actively looking for them?

In my opinion if HMV closes its doors then the entertainment market as a whole is going to suffer. Maybe if worst comes to worst I’ll be wrong, which would be a good thing. But if I’m right then sales in the UK will fall again leading to less variety in gaming due to lost revenue.

We’re at a stage where it’s too early for a digital only market, too late for traditional high street retail practices, and a market with too few competitors.

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30 Comments
  1. jesta
    Member
    Since: Feb 2011

    I can see Tesco and such stores rubbing there hands together with pound signs in their eyes.

    Such a sad day for HMV and the uncertainty of all those jobs.

    Comment posted on 15/01/2013 at 08:27.
  2. Zimsalabim
    Member
    Since: Aug 2010

    I’m as appalled as you are: but there’s a reason it closed and we’re all too blame. Same reason Jessops closed last week – online is cheaper. I know we’re cutting our own throats but when you see a game for a tenner online, or thirty quid in HMV what are you going to do? Even as I walk empty-handed out of the store, I’ve always felt guilty about the long-term consequences – yet I still walk. There was a time when guilt might have led me to buy something – anything – but no longer. Time’s are hard and although charity begins at home, I don’t include HMV; rather, I think of them as hubristic opportunists who’ve gotten away with price gouging for too long. Their departure will simply leave the field open for a start-up offering realistic pricing. We’ll all pay a LITTLE more, given the chance to support a clued-up retailer and cool / knowledgable staff.

    Oh, wait. Isn’t that how GAME began?

    Err…

    Comment posted on 15/01/2013 at 08:32.
    • Eldur
      Member
      Since: Nov 2012

      ^This.

      HMV has stubbornly refused to acknowledge the online marketplace for over a decade now, insisting on adhereing to over-inflated RRPs for new releases and doggedly over-pricing aging and second-hand stock. As with any business, if you fail to provide a unique selling point AND react to competition then commercial failure is almost a certainty.

      I look forward to the rise of the independants, small gaming boutiques who leap on low rents to provide dedicated, informed advice to enthustiasts and the general public alike. GAME are starting to understand the attraction of this type of service (in Newcastle at least) but I’m still put off by their aggressive prices and unwavering support of gaming franchises.

      Comment posted on 15/01/2013 at 09:32.
    • ico
      Member
      Since: Aug 2010

      Totally agree but it is of course always sad to see so many jobs going and let’s not forget the human aspect. Companies like HMV are of course trying to earn a decent profit but all the workers let go may find it difficult finding new employment in the high street and my thoughts go out to them.

      Comment posted on 15/01/2013 at 17:28.
  3. bigbaldwolf
    Member
    Since: Mar 2012

    Our high streets will be dominated with takeaways, coffee shops and pounds shops before long and the only people in town will be salesmen and charity workers.

    Comment posted on 15/01/2013 at 08:41.
    • Zimsalabim
      Member
      Since: Aug 2010

      Initially, yes. But cheap rents are like honey pots to start-ups and entrepreneurs. They might not be entertainment retailers, but you can bet that new shoots will appear. Look at how Robert Dyas has filled Woolies shoes, for example. Now if ShopTo could be persuaded to do something, then I’d be all ears… But I have to say that the days of high street entertainment multiples are numbered – it’s just the way things are with downloads and so on. Ten years from now, the high streets are going to be unrecognisable but I’m a believer in evolution, not desolation.

      Comment posted on 15/01/2013 at 08:51.
  4. Skyfire
    Member
    Since: Nov 2009

    Theres also the small possibility of a resurgence in small game based shops , in the city near where i live there was a game , a HMV and a small games shop , game pulled out last year leaving HMV as the only competition. Although the loss of a rival and store is always a bad thing good things may come because of it.

    Comment posted on 15/01/2013 at 08:57.
  5. DividSmythe
    Member
    Since: May 2012

    Good point well made. I heard about the major problem’s they had before xmas so I went shopping at my local HMV. It was the Sunday before Xmas but the queue was practically out of the door. I myself just preorder everything I want from Amazon. Its easier and with prime it usually comes on release and price match promise does loads of the convincing to me. It means I don’t have to shop around.

    Comment posted on 15/01/2013 at 09:22.
  6. Mike
    Member
    Since: Oct 2008

    Best case scenario will be a buyer coming in to save the most profitable stores.

    I think at the very least the online portion of the business will be saved and I hope it is – I do use HMV online quite a bit

    Comment posted on 15/01/2013 at 09:23.
    • Zimsalabim
      Member
      Since: Aug 2010

      I agree – the brand is its strongest asset so it’ll live on-line, much like Zavvi did after it closed its stores.

      The most profitable stores might have a second chance but I doubt it. After all, Zavvi was born from the ashes of Virgin stores and lasted just over 6 years in high street retail. And that was then.. Here we are, a few years on and downloads have encroached still further – no one is going to want to back a consortium to face that market. That’s why last week the receivers pulled the plug on Jessops without any chance of a buy-out.

      Who’s next? My money’s on Waterstones…

      Comment posted on 15/01/2013 at 09:34.
      • Bilbo_bobbins
        Member
        Since: Jun 2009

        Waterstones, WH Smith most definitely. I’m surprised they are both still around anyway. The only reason WH Smith hasn’t gone is probably because of passing trade from having the post office in some of them.

        Comment posted on 15/01/2013 at 09:40.
    • Mike
      Member
      Since: Oct 2008

      Here’s a good article from BBC: http://www.bbc.co.uk/news/business-21023602

      Comment posted on 15/01/2013 at 09:55.
  7. Bilbo_bobbins
    Member
    Since: Jun 2009

    In a way, this is a good thing for new business opportunities to rise from the ashes of the over bloated and boring high street. I would never wish anyone to lose their jobs and I feel sorry for those who will, but HMV have never been competitive.

    In todays market you need to be competitive, savvy and do something different. HMV were riding on the times when online didn’t have a big presence.

    It’s a real shame as I trade and buy from my local HMV all the time, now it looks like Supermarkets will be taking over for the time being for highstreet sales.

    Comment posted on 15/01/2013 at 09:39.
  8. Torquemada
    Member
    Since: Oct 2008

    The government are to blame. The rates and taxes that are charged to retail outlets are just astronomical. In a time of recession where every business is struggling, Ministers should have the gumption to ease the burden on struggling businesses by granting tax concessions. Because they didnt, they are now looking at 4500 on the dole, which Im sure is going to be a greater burden to the tax payer than any tax concessions they couldve made. It infuriates me that the Government gave handouts to the banks, who are responsible for this situation in the first place. Anyway, as much as I love gaming, I will never pay £50 for a game, ever. If the prices do rise then I just simply wont bother buying games any more. Ive got a PC, and theres plenty of free to play games.

    Comment posted on 15/01/2013 at 09:42.
    • Zimsalabim
      Member
      Since: Aug 2010

      I share your sentiment but the key phrase we all have to remember here is ‘Too Big To Fail’.

      HMV? No.
      Jessops? No.
      The entire UK (and by extrapolation, the World’s) banking system, underpinning the capitalist society we all enjoy? Hmm, yes. Kerching.

      Comment posted on 15/01/2013 at 09:52.
  9. BullyBeefUK
    Member
    Since: Jan 2013

    Hitman Absolution in HMV on release £40
    Hitman Absolution in Asda on Release £35 with enough left over for apple Pop Tarts.

    Also noticed the game was down to £20 within a couple of weeks at Asda, as was Borderlands 2 and PES2013. When the Vita came out you could buy it for £3 under the £200 mark.
    HMV have always been the most expensive, not unjustly with costs online retailers avoid, but that meant going under was inevitable. Asda and Tesco take a hit on most new releases just to get you through the door, but cheaper is cheaper and I doubt many people will spend the extra £5 just to keep HMV afloat.
    As HMV going under was inevitable so is a price increase when the supermarkets corner the market. Then perhaps even supermarkets will lose business to online retail. All this time we’ve seen it coming and all this time we could have backed the specialist retailers with our wallets. But fact is – HMV dont sell Pop Tarts.

    Comment posted on 15/01/2013 at 09:56.
    • flatspikes
      Member
      Since: May 2009

      I do love a box of apple pop tarts… And for pretty much free top:-)

      Comment posted on 15/01/2013 at 21:24.
  10. bmg_123
    Member
    Since: Feb 2012

    The lack of drive/ability to compete with online pricing is what I believe to be the downfall of retail. But with retail you don’t have to wait for your product, and the staff in certain places can also be very helpful. In fact I went into Jessops on the 11th, unaware they would close that very same day, and the guy in there was very helpful, letting me check out a camera whilst being polite and friendly. You simply don’t get that online, and you can’t pick up items and size them up for yourself, so whilst I doubt retail will go away, it simply must change it’s stagnated ways of fixed pricing and in the case of some shops, trying to screw the consumer that already knows where they can get it cheaper.

    Comment posted on 15/01/2013 at 10:05.
    • plutoniumdragon
      Member
      Since: Dec 2008

      Very few bricks and mortar stores can sensibly compete on price alone with online, the only thing you can do is add service and hope the perceived additional value is seen as worthwhile.
      Seems to be working for John Lewis, at the moment anyway…

      Comment posted on 15/01/2013 at 11:21.

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