HMV Administration Looms as Physical Media Sales Fall

HMV administration may be all but inevitable. Although the retail chain had previously escaped administration in 2013, the decline of physical media sales has contributed to the financial troubles of the company.

Customers in the United Kingdom are all too familiar with HMV. The chain sells its fair share of physical media including DVDs, Blu-Rays, music CDs, and video games, as well as Funko Pops. Unfortunately, physical sales have been declining at the outlet and notice was filed to begin the process of HMV administration.

Administration is a process in the UK and other countries similar to bankruptcy in the United States. An administrator is appointed to handle the finances of a company that’s not doing all that well in the hopes that they can pay off their debtors and (ideally) make the company profitable again. HMV administration may result in the sale of assets, termination of employees’ contracts, or the entire business being sold, depending on what the overall financial picture looks like.

HMV has anticipated that physical media would become a less important part of their business over the years and it has already enacted several measures to make up for this shortfall. The company invested in a concept similar to UK video game retailer GAME’s “Belong” arenas; essentially, they had the equivalent of net cafes set up at various locations to allow people to play games on high-end PCs and popular consoles.

HMV also has its own cinema and several music venues included in their effort to focus on entertainment services over the sale of physical goods. Unfortunately, this was not enough to keep them going; the decline in physical media sales led HMV chairperson Paul McGowan to state that  “[…] a deterioration in a key sector of the market is unsustainable.”

2,200 jobs are at risk during this HMV administration. If the company does end up closing its doors, it will be the third retailer with a heavy focus on gaming to shutter this year after Toys “R” Us and Grainger Games shut down. The Scottish retail chain Games Centre and online retailer GameSeek had also closed this year. If things continue in this fashion, UK gamers might end up having to go elsewhere to get the newest releases.

[via GamesIndustry.biz]