Music and DVD Retailing - UK - March 2008

Table of Contents

• Issues in the Market
• Definitions
• Abbreviations
• Market in Brief
• Music market is in crisis
  • Figure 1: Pre-recorded music and video/DVD markets, 2002-07 (e)
• More DVDs sold, but video also tough
• Positive factors for music and DVDs...
• ...but a whole range of negatives
• Leading retailers
• Is the future in high definition?
• DRM -- how to unblock download demand
• Technology in the home: opportunity or threat?
• Industry Insights
• Who is commercially most successful at the moment and why?
• What will happen to the market for physical products (eg CDs, DVDs) in 2008?
• What are the prospects for paid-for music downloads?
• Who represents best practice in terms of physical stores at the moment?
• Can niche retailing formats ever have a viable future?
• Does it make sense to introduce music retail into new environments like coffee shops?
• Who provides the best download experience?
• What stage do you think video download is at and when will it make an impact?
• What is the fundamental barrier to the future of video downloads? Is it broadband speeds, or something more fundamental?
• How much further can the supermarkets grow their share of the music and DVD market?
• Can you design stores that attract the under-25s as well as the ' 50 quid bloke' generation?
• How important will strategic partnerships be in future?
• What impact will the decline of DRM have on the market?
• Is it possible to create an offer that will discourage peer-to-peer file sharing?
• Internal Market Environment
• Key points
• Industry consolidation
• Downloads: good for singles, but what about albums?
• Illegal downloads: the crackdown continues
• ' Free' legal content: another challenge
• DRM in decline or not?
• Blu-ray is the next VHS
• Broader Market Environment
• Key points
• Interest rates: starting to hit retail sales?
  • Figure 2: Bank of England base rate, percent per annum growth in value of sales, predominantly food and non-food retailers, 1997-2008
• Teenagers and 35-44s to decline
• Broadband penetration/broadband speeds
  • Figure 3: Percentage of adults with access to broadband and dial up Internet at home, 2003-07
• Ultra-fast fibre-optic connections could change this picture
• Rise of online shopping
  • Figure 4: Percentage of Internet users who have bought online in various product categories in the past 12 months, 2003-07
• Supermarkets move into non-food
  • Figure 5: Percentage increase in all retail sales, predominantly food retailers versus non-food, 2002-07
• Market in Context
• Key points
• Music and video lose share
  • Figure 6: Music and video markets versus recreation and culture and total household expenditure, 2002-07
  • Figure 7: Music and video market, as percentage of recreation and culture and total household expenditure, 2002-07
• Strengths and Weaknesses in the Market
• Strengths
• DVDs still rising in volume
• Paid-for downloads boost singles volumes
• 25-34 age group set to grow
• Rising broadband penetration
• Weaknesses
• Deflation in both CDs and DVDs
• P2P sharing sites erode market
• Consumer spending feels the impact of higher interest rates
• Falling volumes of CD albums
• Market Size and Forecast
• Key points
• Music tough again in 2007
  • Figure 8: Pre-recorded music market, at current and constant 2002 prices, 2002-12
• Video levels out
  • Figure 9: Pre-recorded video and DVD market, at current and constant 2002 prices, 2002-12
• Downloads to take up a fifth of the market
  • Figure 10: Forecast of the pre-recorded music market, by physical and downloads, at current prices, 2002-12Figure 11: Forecast of the pre-recorded music market, by physical and downloads, at constant 2007 prices, 2002-12
• Market Segmentation
• Key points
• Specialists still ahead in music
  • Figure 12: Pre-recorded music market sales and percentage share, by distribution channel, 2007
• Albums hit the rocks
  • Figure 13: Pre-recorded music market estimated sales, by music format, 2002-07
• Grocers close in on specialists
  • Figure 14: Pre-recorded video market sales and percentage share, by distribution channel, 2007
• VHS dies but DVD still on the rise
  • Figure 15: Pre-recorded video market estimated sales, by format, 2002-07
• Where They Buy Music and DVDs
• Key findings -- supermarkets
• Key findings -- specialists/Internet retailers
• Where they buy CDs and other pre-recorded music
• Supermarkets lead market for CDs
  • Figure 16: Where consumers purchase CDs and other pre-recorded music, November 2007
• Between the ages of 20-24 and 25-34
• HMV is youth winner
• Zavvi is more male and slightly older
• WH Smith covers all ages
• Woolworths more female and downmarket
  • Figure 17: Where consumers bought CDs and other pre-recorded music, by gender, age and socio-economic group, November 2007
• Amazon is upmarket
• Play.com and eBay appeal to teens
  • Figure 18: Where consumers bought CDs and other pre-recorded music, by gender, age and socio-economic group, November 2007
• Where do consumers buy music downloads from?
  • Figure 19: Where consumers paid to download music from, November 2007
• iTunes focused on under-45s
  • Figure 20: Consumers that purchased music from iTunes, by gender, age and socio-economic group, November 2007
• Where they buy DVDs or other pre-recorded videos
  • Figure 21: Where consumers purchased DVDs and other pre-recorded videos, November 2007
• Supermarkets dominate in DVDs as well
• Supermarket DVDs mainly bought by women
• Profiles similar for DVDs as for CDs
  • Figure 22: Where consumers purchased DVDs and other pre-recorded videos, by gender, age and socio-economic group, November 2007
• Amazon has wide age spread
  • Figure 23: Where consumers purchased DVDs and other pre-recorded videos, by gender, age and socio-economic group, November 2007
• DVDs fail to reach the over-55s
• Retail Competitor Analysis
• Key points
• The competitive line-up
  • Figure 42: Major music and video retailers' strengths, weaknesses and overall Mintel evaluation, 2008Figure 43: Major music and video retailers' customer base, store numbers, turnover and strategy, 2008
• Smaller online players
  • Figure 44: Minor music and video retailers' competitive position, 2008
• Retailer Profiles
• HMV
• Strategic evaluation
• Background
• Financial performance
  • Figure 45: HMV group and UK financial performance, 2002-07
• UK store portfolio
  • Figure 46: HMV UK outlet numbers and floor space, 2002-07
• New format development
• Retail offering in music and DVD
• Market positioning
• Product offering and pricing
• Operational issues
• Advertising and marketing
• e-commerce and home shopping
• WH Smith
• Strategic evaluation
• Background
• Financial performance
  • Figure 47: WH Smith plc group financial performance, 2002-07
• UK store portfolio
  • Figure 48: WH Smith UK outlet numbers and floor space, 2002-07
• New format development
• Retail offering in music and DVD
• Operational issues
• e-commerce and home shopping
• Woolworths
• Strategic evaluation
• Background
• Financial performance
  • Figure 49: Woolworths group and retail financial performance, 2002-07
• Current trading
• UK store portfolio
  • Figure 50: Woolworths UK outlet numbers and floor space, 2002-07
• New format development
• Retail offering in music and DVD
• Operational issues
• Advertising and marketing
• e-commerce and home shopping
• Zavvi
• Strategic evaluation
• Background
• Financial performance
  • Figure 51: Group and UK financial performance, 2002-07
• UK store portfolio
  • Figure 52: UK outlet numbers and floor space, 2002-07
• New format development
• Retail offering in music and DVD
• Market positioning
• Product offering and pricing
• Advertising and marketing
• e-commerce and home shopping
• Amazon.co.uk
• Strategic evaluation
• Background
• Financial performance
  • Figure 53: Group and UK financial performance, 2001-06
• Retail offering in music and DVD
• Market positioning
• Product offering and pricing
• Operational issues
• Advertising and marketing
• Other players
• Play.com
• 7digital
• CD WOW!
• The grocers
• Tesco
• Asda
• Sainsbury' s
• Retailer Advertising and Promotion
• Zavvi leads on advertising
  • Figure 71: Music and video retail advertising spending, by advertiser, 2003-07
  • Figure 72: Music and video retail advertising spending, by media, 2003-07
• Appendix
  • Figure 73: Where consumers purchase CDs and other pre-recorded music, November 2007
  • Figure 74: Where consumers purchase CDs and other pre-recorded music, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 75: Where consumers purchase CDs and other pre-recorded music, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 76: Where consumers purchase CDs and other pre-recorded music, by demographic analysis, November 2007
  • Figure 77: Where consumers paid to download music from, November 2007
  • Figure 78: Where consumers paid to download music from, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 79: Where consumers paid to download music from, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 80: Where consumers purchased DVDs and other pre-recorded videos, November 2007
  • Figure 81: Where consumers purchased DVDs and other pre-recorded videos, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 82: Where consumers purchased DVDs and other pre-recorded videos, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 83: Where consumers purchased DVDs and other pre-recorded videos, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 84: Attitudes towards buying CDs and other pre-recorded music, November 2007
  • Figure 85: Attitudes towards buying CDs and other pre-recorded music, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 86: Attitudes towards buying CDs and other pre-recorded music, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 87: Attitudes towards buying CDs and other pre-recorded music, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 88: Attitudes towards buying DVDs and other pre-recorded videos, November 2007
  • Figure 89: Attitudes towards buying DVDs and other pre-recorded videos, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 90: Attitudes towards buying DVDs and other pre-recorded videos, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel' s Special Groups, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007
  • Figure 91: Attitudes towards buying DVDs and other pre-recorded videos, by gender, age, socio-economic group, marital status, lifestage, presence of children, working status, tenure, region, ACORN category, media usage, household size and car ownership, November 2007