“Opportunities to create real value in digital are scarce for all involved,” HMV (LSE: HMV) said, reporting 3.1 percent higher annual income, “not least because of widespread competition from the free illegal market.”
The entertainment retailer in September bought 50 percent of digital music seller 7digital for £7.7 million in cash plus £400,000 fees, but has already recorded a £600,000 loss from its share since then.
HMV nevertheless declares itself “pleased with progress since the acquisition”, saying: “This is a long-term strategic investment for the group, with significant potential beyond powering our own brands in digital.”
HMV is diversifying from the contracting recorded-music market, which makes up 28 percent of HMV sales — for example, in to live music by acquiring Mama Group and in to digital.
Technology products have reached six percent of HMV sales, aiming to reach 12 percent by 2013.
Waterstones.com sold a million e-books.
HMV wants Waterstones to increase e-readers, accessories and stationery from six percent of sales to 10 percent by 2013.
Game sales dived 25 percent in what was a poor year for everyone in games.
Group revenue came in 3.1 percent up at £2 billion, with profit up from £44.2 million to £49.2 million.
HMV UK & Ireland sales are down 2.4 percent, Waterstones sales down 6.2 percent.