Declining Video Sales Contribute To Lousy 3Q Results At Best Buy - High-Def Digest Forums
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Old 12-13-2011, 10:36 AM
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Default Declining Video Sales Contribute To Lousy 3Q Results At Best Buy

http://www.deadline.com/2011/12/decl...s-at-best-buy/

Declining Video Sales Contribute To Lousy 3Q Results At Best Buy


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Considering how much of the revenue in Hollywood comes from retail sales and consumer electronics, there’s sure to be some teeth gnashing over the earnings figures out this morning from Best Buy for the quarter that ended in November. Shares in the No. 1 electronics chain are down more than 11% in early trading after it reported net profits of $154M, down 29% from the same period last year, on revenues of $12.1B, up 1.8%. Factoring out a one-time restructuring charge and a gain on an investment sale, earnings came in at 47 cents a share – below the 51 cents that analysts expected. Best Buy attributes much of the profit drop to declining purchases of of digital cameras and game consoles, as well as promotions — including those on Black Friday — to drive sales of tablet computers, TV sets and movies. Still, entertainment sales including music and DVDs fell 9% at domestic stores open 14 months or more. They now account for 13% of Best Buy’s U.S. revenue. Consumer electronics, which represent 35% of Best Buy’s domestic sales, were down 4.8%. The chain had better luck with computers and mobile phones which represent 40% of sales, and were up 8.8%.

Best Buy’s announcement came as the Commerce Department offered a mixed picture of retail sales in November. Spending increased 0.2% with gains for electronics, appliances, cars, clothing, and department store items but declines for building materials, gas, and groceries. It’s the sixth consecutive month of growth, but it’s less than forecasters expected — and down from the 0.6% spending growth in October.
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Old 12-13-2011, 10:38 AM
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Oh yeah. I can totally see why Best Buy will grow the OD section. Because DVDs and Music did so well.

Not a single mention of Blu-ray (lumped in with DVD I suspect, as usual)...but won't that stay the same and/or grow?

Sidenote - my Best Buy moved the mobile center to the front of the store (right when you walk in). OD is still in the back of the store in a corner.
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Old 12-13-2011, 10:40 AM
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So CinemaNow didn't help any? It wasn't mentioned either

Uh oh.
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Old 12-13-2011, 11:13 AM
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From the article:

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Best Buy attributes much of the profit drop to declining purchases of of digital cameras and game consoles, as well as promotions — including those on Black Friday — to drive sales of tablet computers, TV sets and movies.
The promotions aspect are the loss leader sales. Best Buy has some solid ones, and it looks like they were trying to drive more traffic and get folks to buy other items, and they fell short.
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Old 12-13-2011, 01:45 PM
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Originally Posted by ack_bak View Post
From the article:



The promotions aspect are the loss leader sales. Best Buy has some solid ones, and it looks like they were trying to drive more traffic and get folks to buy other items, and they fell short.
Many people are also using Amazon for purchases now. Unless it's a Best Buy exclusive I don't shop at BBuy anymore.

Gizmo didn't you mention in another post Thread that you use BBuy az an Amazon showroom? I think others do as well.

Best Buy has more problems than optical disc sales. They are also poorly run at the corporate level. I wonder if Reed Hastings is in charge?
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Old 12-13-2011, 01:47 PM
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So CinemaNow didn't help any? It wasn't mentioned either

Uh oh.
Nope no mention of the Best Buy Cinemanow program. Must have done poorly?
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Old 12-19-2011, 05:43 AM
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Rogers closing about 40% of its video stores

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TORONTO - It looks like the video store is one step closer to extinction.

Rogers (TSX:RCI.B) is now in the process of closing about 40 per cent of its video shops as it continues to transition away from renting and selling DVDs, Blu-rays and video games.

By the end of January, the company will have finalized the closure of 63 video outlets across the country, leaving behind just 93, a Rogers spokeswoman said.

"It's a declining marketplace, all we're doing is meeting market need," Sian Doyle, Rogers's vice president of retail, said in an interview.

As far back as 2005, Rogers has been signalling that its video business was on the decline. In its most recent report to investors in October, Rogers said its video revenues for the first nine months of the year totalled just $60 million, down 46 per cent from 2010's $111 million. Rogers said revenues were down due to reduced video rentals and sales, and because it had about 20 per cent fewer stores in operation compared to the start of 2010. The video division lost $16 million through the end of this September, compared to $13 million in the same time frame last year.

Rogers' move to further reduce its network of video stores comes a few months after Blockbuster Canada decided to close up shop across the country, shuttering more than 400 stores.

But Doyle said even Blockbuster's disappearance hasn't done much to bolster its business.

"Interestingly, not as much as what we thought," she said.

"When Blockbuster closed we were expecting the market to be very different ... but what the customer said was, 'You know what? I'm not going to drive another five kilometres (to the nearest video store). I'm going to PVR, watch video on demand.'

"The market didn't grow as some would've thought."

Consumers have more access to content then ever before, Doyle noted, including PVRs crammed with hours of shows to watch, loads of online options to stream content, and video on demand channels that handle seamless rentals.

"Content is really, really accessible now so you don't have to have that physical place," she said.

"I don't think it's what we're doing as much as that customers are finding how easy it is to find it in a different way."

Rogers' strategy makes sense, even if some video stores have at least a few years of viability left before digital fully takes over the market, said Brahm Eiley of The Convergence Consulting Group.

"Rogers' approach — shutting these stores, which they've been doing for years — is far sighted. Rogers Video is not a critical part of their business, it has not been a critical part of their business probably forever — or at least for a very, very long time," Eiley said.

"It's the right move, especially since they already have an online (video business in Rogersondemand.com) and there really isn't a great advantage for them to stay in (retail)."

But he still thinks video stores will survive for some time, especially when it comes to the smaller independents. While there have been numerous stories about long-standing indie stores shutting down, there are plenty of others that are doing just fine, he said.

"For every independent that's hurting and closing down the store there's another that's doing OK," Eiley said.

"For a lot of these guys they have a good business going, so unless the DVD goes away they're not going out of business.

"But will those stores continue to decline? Yeah. And will the video store be around in 10 years? No. But it's going to be a long, slow decline."

Quebecor still has a large chain of more than 200 video stores under the Le SuperClub Vidéotron brand in Quebec, New Brunswick and Ontario, and the Jumbo Video name in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island.

While Rogers is slowly walking away from its video stores, it's not getting out of retail. It will still have about 1,000 stores at the end of January — including the existing video shops — and is working on a new chain-wide revamp that puts expensive smartphones and tablets front and centre.

There are two concept stores in Toronto and one about 100 kilometres north in Barrie already being tested and tweaked. Doyle oversaw the bold redesign, which includes a sharp red-and-grey palette and stylish furniture so customers can relax in store.

A greeter welcomes customers when they enter and arranges assistance if needed. There are walls of digital devices for customers to browse and all the available smartphones and tablets are plugged in and ready to demo.

Staff will even offer customers a coffee or tea while they're browsing or waiting for service.

"It's a story not about closing, it's about transformation and evolving for us," Doyle said.

"It was very much about getting the (business) that we had to a place where we reflect where our future state is to be."
HMV Group Has ‘Significant Doubt’ About Future

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Dec. 19 (Bloomberg) -- HMV Group Plc, the U.K.’s biggest CD and DVD retailer, said the economic downturn and weak trading conditions may cast “significant doubt” on its ability to continue.

The company said its first half pretax loss from continued operations before exceptional items widened 32 percent from last year to 36.4 million pounds ($56.4 million).

HMV Group has 163.7 million pounds of underlying net debt, up 7.9 percent on last year, the Maidenhead, England-based retailer said in a regulatory statement. Like for like sales from continued operations fell 11.6 percent compared with 15.5 percent last year.

In June HMV reported a 123.1 million-pound ($198.1 million) full-year loss after taking impairment charges on its sales of Waterstone’s book chain and its Canadian outlets. The company said it will scale back on stocking CDs and DVDs in favor of consumer electronics, and expand its live event operations, HMV Live. HMV said it has initiated a strategic review of HMV Live which may lead to its sale.

The board has “reasonable expectation” that the company will have resources to continue for the foreseeable future, the company said. “However, the economic environment and trading circumstances create material uncertainties which may cast significant doubt on the Group’s ability to continue as a going concern in the future.”

DVDs getting harder to find

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Kevin D’Silva scans scant shelves of DVDs at Wal-Mart, looking in vain for a gift that his two young daughters will cherish this Christmas.

It’s a movie called Barbie: Princess Charm School, and the family has already legally downloaded it. But the girls want a tangible copy too, one they can hold and admire — and most important, unwrap.

But the doting dad appears to be out of luck.

“It’s sparse,” said the father to a 5 and 7-year-old, as he stands in the electronics aisle at the Pharmacy and Eglinton Ave. store.

“The selection is poor compared to other times,” adds his wife.

DVDs were once a stocking-stuffer staple, an easy gift to pick up in a movie rental or big box store that was sure to please anyone of the list.

These days, they're getting harder to find.

“There are fewer DVDs on the shelves,” said Neil Bearse, marketing expert at the School of Business at Queen's University.

“It looks like that piece of physical media is potentially on its decline.”

If sales are any indication, he's right.

According to statistics provided by information and management company Nielsen, DVD sales fell by 12 per cent in Canada this year compared with last.

At Scarborough-based Cinram International, which specializes in manufacturing and shipping CDs, DVDs, and Blu-rays discs around the world, revenue from DVD replication and distribution was down 25 per cent between 2010 and 2009, according to the company's annual report.

The loss was due primarily to the Warner Home Entertainment contract in July 2010, the company said.

“Definitely, there's less DVDs being manufactured now than there were in the years gone by,” said chief financial officer John Bell.

However, he added the drop in DVDs being manufactured is “offset to a certain degree” with the number of Blu-ray discs being sold, which is on the rise but still just a slice of DVD production.

“Obviously they're not going to make what they're not selling,” said Bell.

And that's had an impact on store selection.

At a Rogers rental store in Toronto's east end, only three slight racks in the centre of the store offered DVDs for sale.

A few years ago, there would have been double the amount, an employee estimated.

“Over the past few years, some retailers have chosen to slightly cut down on the amount of space they're giving for the category (DVDs) within the store,” said Billy Law, director of Home Entertainment Measurement at Hollywood-based Nielsen.

“That's been fuelled by the fact that sales for the category have been declining.”

But Law said the biggest change to the DVD market has undoubtedly been the rental landscape online, which also precipitated the bankruptcy of movie-rental chain Blockbuster Inc.

“We actually believe that people are watching movies more than ever these days. What's happening is they're changing the way that they're accessing movies,” he said.

A spokeswoman for Rogers wouldn't comment on the number of DVD titles offered in stores. Leigh Ann Popek would only say that the company anticipates “selling DVDs still this holiday season.”

But there's no doubt the addition of Netflix, as well as iTunes, has changed the way customers watch movies and TV shows.

Even technology is conspiring against the DVD.

Bearse notes the new MacBook Air computer doesn't even have a slot for a disk any more, nor does the popular iPad tablet.

He relayed an anecdote about visiting five stores to find a DVD rack, only to leave empty-handed.

“It's very similar to what happened with music,” Bearse said.

Digital content, “fits the lifestyle that a lot of people have now,” which operates on various devices.

As for D'Silva, he'll be heading online for the first time this year to do his Christmas shopping.

And if he can't find that Barbie DVD, “we'll compromise and get something else — in another store.”
f.y.e. closing store in West Manchester Mall

The rise and (eventual) fall of Sam Goody in Horton Plaza
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Old 12-21-2011, 12:27 PM
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I think a lot of people are overlooking the fact that the economy is still not as healthy as it should be. With the debt crisis in Europe, high prices for energy, food and other necessities, many would probably see entertainment as a luxury. By the time this is all said and done, I believe we'll be looking at a different kind of consumer. ...and it may not benefit stores like Best Buy.
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Old 12-21-2011, 12:50 PM
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It's ok. Bluray will have its little section in the back of the store. Much smaller than the old DVD section. It will be there for a while until its phased out. It will be awhile though. BB still has an LP section. But it's there so it must be considered sussessful still! some people will try so hard to look for excuses and reasons to say everything is fine with Bluray. Reality says different. Need to look at the big picture. And it ain't pretty.

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Old 12-21-2011, 12:54 PM
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Originally Posted by Solstice X View Post
I think a lot of people are overlooking the fact that the economy is still not as healthy as it should be. With the debt crisis in Europe, high prices for energy, food and other necessities, many would probably see entertainment as a luxury. By the time this is all said and done, I believe we'll be looking at a different kind of consumer. ...and it may not benefit stores like Best Buy.
Yes the economy is not healthy, and that will greatly impede any growth in the entertainment/home video sector.
The Rogers video in my area is closing and all movies are "buy 1 and get 2 free". I came a day late and everything had been picked over. All games were gone, except for workout video games.
There is officially no place to rent games/movies in my area. The closest is 40 minutes away and that store is threatening closing because of little business. Blockbuster closed, Rogers closed, Netflix does not do OD in Canada so the alternative is VOD, Netflix Streaming and movie channels on the tv.
The closing of the video stores reminds me of how there used to be arcades all over town when I was younger and how packed they were. Now they are all gone.
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