HMV's preliminary results for the 2008 financial year make for some interesting reading, particularly as you look at the impact that videogames is having on the entertainment retailer's revenues.
To find out more about the company's views on the games business, and to uncover some more details about the planned roll-out of pre-owned sales across its stores, GamesIndustry.biz spoke to Tim Ellis, the retailer's head of games.
This figure also includes our technology products, such as mps players, but it definitely underlines how important games have become to the overall mix of products that we sell. The equivalent figure a year ago was 14 per cent - so you can see scale of the positive trend we are talking about.
Anyone who has been following the development of our games offer really shouldn't be that surprised by this level of growth - we've been telling the world for some time that we are very serious about our commitment to the games market.
We've been investing substantial resources into the format so that we can become a serious and credible force as a leading games specialist: there is significantly more trading space in-store and increased numbers of staff dedicated to it; our level of marketing and promotion has also gone up considerably - much of it in our 'get closer' brand style, which aims to get players closer to the games they love; while we've also consistently offered some great deals on bundles, pricing and points rewards - both in-store and online at hmv.com.
Obviously it also helps that the last twelve to eighteen months have represented a bit of a golden period for games in terms of next-generation console launches and fantastic software releases, but we had to put ourselves in a position to make the most of this opportunity, and I think we're doing that.
That games are becoming ever-more popular, and are increasingly connecting to the mainstream. While the market is still highly dependent on the core enthusiast - and, in fact, will always rely on the gamer, it's also the case that products such as Wii and handheld consoles are broadening the appeal of games to connect with a wider, more family based audience, which HMV is well-placed to cater to.
They've certainly played a big part in the performance of the games market over the past few years.
Like any new products, they provide a stimulus and create momentum going forward, helping to keep existing fans engaged and responsive, while also attracting interest from a new generation of players. And, of course, with new consoles come additional software sales, which means successful publishers are generating the revenues to invest in new titles while manufactures can continue to develop cutting-edge technology. It all creates a virtuous circle of growth.
Their contribution has been immense, and can't be stated enough. Aside from the huge numbers they achieved, they get people in-store or online, and are a huge driver of sales. They get people excited, and get them talking about games, and, of course, they can generate a huge amount of media interest, which feeds into wider public awareness.
They have been absolutely stellar releases for us. GTA IV is our fastest-selling title ever: we'll always love music - it's in our DNA after all, but, if it's not too much of a cliché to say it, the truth is that games really are the new rock 'n' roll.
Everyone has seen the changes taking place in the music industry over the past few years, so if anyone is aware of the need to be adaptable and responsive to changing consumer demands, then it's us.
We totally recognise that the Internet and digital technology has enabled people to discover and consume content in new and different ways. For the moment this applies primarily to music, but we've shown that we can respond to these changing market conditions, and there's no reason why we can't do that in the case of films and games should similar changes happen in these areas. For example, we've already been trialling with in-store gaming concepts.
Having said that, I can't see film or games moving away from 'packaged products' in the near future, and even if there is a trend, what we are seeing with music is that core enthusiasts like to have the best of both worlds: they appreciate the immediacy and versatility of downloads, but as fans and collectors they also like to own and collect the 'physical' product. That way they get to own the music - the thing they love most, at source, which gives them the scope to do another things. I don't see why the same can't one day apply to games.
We've regularly monitored pre-owned activity in the games market, and have periodically reviewed our own stance in this area, as any business would. We recognise that pre-owned is important for some consumers, though not necessarily the most dominant factor for them, while it's clearly also a key element to the business model of some games specialists. With this in mind we think it's worth trialling pre-owned to gauge what our customers expect from us and also to assess the impact not just on HMV's own games offer, but on our wider trading operation.
Any decisions we make will have the best interests of our customers in mind, and if we can, we will look to achieve this through positive dialogue with our suppliers.
Tim Ellis is head of games at HMV. Interview by Phil Elliott.