‘Difficult’ Times for HMV

HMV has reported a decline in like-for-like sales over the Christmas period also a six month loss. In their own words, HMV is in experiencing ‘difficult’ times.

Christmas sales weren’t helped with a relatively mediocre roster of releases: the resuscitated Take That and and X-Factor winner Leona Lewis respectively topping that album and singles charts speaks a thousand words.

But the fact remains that HMV are on the sharp end of a extended period of readjustment for the music industry. CD sales are declining and don’t show any signs of stopping doing so. Digital won’t redress that balance for a few years and even when it does HMV aren’t yet in a position to significantly capitalize on the trend.

The European digital music market is intrinsically linked to MP3 player sales and usage. The MP3 player market and digital music market are dominated by Apple. Therefore European digital music sales are intrinsically linked to the iPod.

HMV sells digitally in WMA format so has to ignore the largest single component of the digital music buying population. Until (if) something happens to the closed loop ecosystem model HMV and other retailers will have to face the harsh reality that they are competing among a plethora of WMA small fry also-rans in the shallow waters whilst Apple’s Great White glides effortlessly through the deep open waters.