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HMV's Simon Fox - 2

The retailer's CEO on supermarket price slashing, Gamerbase and the Pure card

Last week we published the first part of the wide-ranging interview with Simon Fox, CEO and MD of HMV UK & Ireland, in which he discussed the state of the retailer's business in 2010, the impact of social media on core gaming habits and his hopes for motion control

Here in part two we tackle the thorny issue of supermarkets and below-cost selling, the future of live events and games with the company's Gamerbase brand and why HMV's Pure card can offer gamers something other than discounts on games. We're seeing publisher generate strong revenues from DLC these days - but that's not really something retailers can participate in strongly, but it does extend the lifespan of a game. Is that a good thing, or does it erode your pre-owned business?
Simon Fox

Anything that keeps the original sale of the packaged software going is good, as far as we're concerned. I do think people expect to be able to play with their friends, to buy extras - from a retailer point of view it's not a problem.

It's hard for us to participate, as you say - other than selling the gift cards, the points cards. Certainly that's an area that we've probably been a bit slow to get into, because it's a very fruitful area - and we do intend to make sure we're selling the full range of electronic cards for consoles, options and so on that are out there.

That's not the only way, but it's probably the most obvious way for the retailer to participate - for many people they prefer paying cash to a retailer, to get the card and then be able to use it online. If you're the publisher and you have a revenue stream that's coming direct from the consumer - or at least without having to go via the distributor and retailer, with the cost of manufacturing the cards ... How much enthusiasm has there been from publishers to put those cards into stores?
Simon Fox

I think there's high enthusiasm. You only have to look at iTunes to see how important the card is to them. They won't give their statistics, but it's a surprisingly high proportion of their total sales that come from gift cards - you are making a £10, £20, £50 purchase rather than, for music, a 99 pence purchase. And if makes music giftable once again - that's going to be key. If you're looking for a present for somebody, it's hard to give them the latest add-on for Red Dead Redemption, for example.
Simon Fox

Exactly - so gift cards, particularly during the key season around Christmas, are very important. I think iTunes is a great example of that.

There's also the HMV Pure card - in time we could make exclusive downloadable content available to our members, which could be a way for publishers to engage. Communities and networks are everywhere - we have one ourselves, of course, because we want to offer increasing benefits to the industry over time that would be much harder without more cohesive engagement - but as a consumer there's a lot of competition for your sign-ups, whether it's media, publishers, retailers and so on. How do you, as a company, promote the Pure card and market the benefits over and above any other offering?
Simon Fox

Well, we run two very different schemes - we also have the Waterstone's card as well. But if I talk about the HMV one, we ask a small fee for the card - £3 - and that is because we want people to make this conscious decision to take the card. It's too easy for people just to take one, but then not really be engaged. You probably already have a Subway card, a Costa card...
Simon Fox

It's all worthless, I think - but if you just charge a small amount of money there's a conscious decision that I'll keep the card in my wallet. What we've tried to do with Pure, this isn't about points equals discount, which is frankly a very simple calculation.

This is points equals money-can't-buy rewards - so if you've got a Pure card and you have enough points you can go to film premieres, you can have VIP access to festivals, you can meet and greet an artist of your choice, you can spend a day at a games studio...

What we're really trying to do with our card is to give back to customers something they wouldn't really be able to get from anywhere else. It's because of our strong relationships with music, film and games studios that we can do that.

Our strapline is "Get Closer" - and the Pure card is a way for people to get closer to the content that they love. We think it's different, and a year on we've got about 1.5 million members - which is great - but what we have to do is also make sure we use the information we now have about our customers in a way that allows us to drive their loyalty back to us.

Clearly what we want is more of their entertainment spend.

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