HMV retains its bet on discs as it reinvents itself in the online era
Under new ownership, HMV Hong Kong reinvents old 'Nipper' into a platform for music and entertainment to compete in the internet age
While many people now listen to music from the internet on their smartphones, music retailer HMV Hong Kong's owner Kelvin Wu King-shiu said his personal collection of hundreds of CDs and vinyl records will not become museum items.
Wu, 44, is principal partner of AID Partners Capital, a Hong Kong-based buyout firm focusing on the entertainment and media industry.
When HMV went into administration in January last year, he bought the British retailer's operations in Hong Kong and Singapore and the rights to develop the brands on the mainland, in Taiwan and Macau.
"Music and movies will never die," Wu said. "Entertainment has become an important part of our daily lives. People still listen to music and watch movies, although the formats may change with time and technology.
"What HMV needs to do is diversify into many different formats of music and entertainment, both in the stores and online, to meet the demands of different customers," Wu told the South China Morning Post.
Wu is a huge fan of recorded music with a collection of more than 500 CDs, 200 DVDs and a huge collection of vinyl recordings.
"The [quality of the] sound in music downloaded from the internet and listened to on smartphones will never be able to match that from hi-fi CDs and vinyl records", and even CDs cannot match vinyl, he said.
"Free music downloads are for people who go to fast-food restaurants for a quick meal at a low cost. Many people do so, but then there are also people who like to go to a good restaurant to enjoy a quality meal.
"HMV can attract customers who are willing to pay for quality of lifestyle to buy our music and visual products as well as high-end music amplifiers and headphones," Wu said.
Buying HMV, the largest home entertainment retailer in Hong Kong, with a 31 per cent market share in music and 32 per cent in DVDs and Blu-Ray, fits with AID's investments in movie making.
The firm is a shareholder in Hollywood Legendary Pictures, which co-produced blockbusters including the three Batman movies and Inception, directed by Christopher Nolan, the latest Superman movies as well as the recent summer box office hit Godzilla.
"Nowadays, people do not only watch a movie at the cinema; many will watch them on DVD or Blu- ray. The sales from DVDs and Blu-ray could equal the sales at the box office and continue as long as eight to 10 years after the movie is released," Wu said.
HMV's Hong Kong and Singapore operations, which were debt-free when Wu took them over, have done well. The six shops in Hong Kong reported 15 per cent growth in the first seven months of this year compared with the same period last year, as he added new products and business lines.
Many mainland tourists buy CDs, vinyl records, Blu-ray discs and DVDs from the HMV outlets, which are in prime locations, including Central and the tourist hotspots Causeway Bay, Tsim Sha Tsui and West Kowloon. Three cafes have been added, two at the shops in Central and at Elements mall and one standalone outlet in Happy Valley.
The 12,500 square foot two-storey shop in the Entertainment Building in Central is being turned into a concept store called HMVideal, which will have its grand opening on September 9.
The store still has films and music for sale, but other features have been added.
There is an area where singers can perform live for up to 300 people. Local pop singer Eric Suen hosted a show there last week. There is also a DJ booth, a recording studio and a section with collectable vinyl records.
Customers can try high-end music equipment such as digital amplifiers and headphones ranging from HK$500 to HK$40,000 in price before making a purchase. There are also toys and other merchandise from iconic movies such as Batman and Frozen, as well as products for children.
"The whole concept is that HMV is not only a shop for people to buy CDs or DVDs, but is a place for all music and movie lovers to get together to talk about entertainment as a community," Wu said. He is considering revamping the other shops in a similar style.
What remains unchanged is HMV's classic mascot, the dog "Nipper", seen everywhere inside the shop and sometimes outside on the pavement in Central, where multiple life-size Nippers draw in customers.
The chain has also kept the HMV charts, with league tables of the bestselling music, movies and television series. The only difference is the charts are now in a digital format to allow customers to sample the bestsellers before deciding whether to buy.
Wu also plans to relaunch a music sales platform, tailor-made for the Hong Kong and Singapore markets, to allow online music purchases and streaming.
HMV has a franchised shop in Hangzhou, Zhejiang province, due to open later this year. Wu is also eyeing opportunities in Macau and Taiwan.