Growth in the home entertainment market continues with fierce competition over online sales of CDs, DVDs and games. Another big focus is digital downloading of music and, soon to come, films. Rod Addy reports
The growth of the home entertainment category continued last year, with a rise of 4.1% to £6.92bn [Video Box Office year-end 2004], driven by sales of DVDs and computer and console games.
However, the fiercest battle between the multiples is over online home entertainment, with both Tesco and Asda launching major internet offensives to exploit the ability to sell a huge amount of lines without taking up valuable shelf space.
Market analyst Verdict Research says £1 in every £9 spent online is on music and video, so it’s understandable why supermarkets are so keen to advance in the market.
The latest volley in the online war has come from Asda, which announced at the end of last month that it would put 140,000 CDs, DVDs and games online. The merchandise is being sourced from Jersey in a bid to drive down prices as items of less than £18 from the island come tax-free for consumers.
The move constitutes a direct challenge to Tesco, which began sourcing products from Jersey for Tesco.com in December.
Music and video share as a proportion of all retailers’ total online sales has also grown ahead of the market, says Verdict. The sub-category climbed from 9.5% to 11.4% from the end of 2003 to the start of 2005, with all retailers’ share of overall internet trading rising from 2% to 2.4%.
Away from physical product, the other key focus for the supermarkets in terms of online sales is digital music downloading.
Tesco has led the way, introducing a rival to Apple’s iTunes service in November, and now claims a 10% market share of the legal download market.
The multiple also pledged to drive sales of the hardware for digital downloading as part of a wider push on digital products announced last month. It is introducing fixtures in stores to create more theatre for the items, which include Inovix MP3 players and Apple iPod Shuffle, and encourage customers to browse the shelves.
“The exciting thing about digital is where we can take it in the future,” says a Tesco spokeswoman. “As the technology grows we’ll be able to turn Tesco.com into a digital download store for games, music, videos and film.”
The ability to download feature films will be the next step in the development of the market and retailers are eagerly awaiting it, says Verdict senior analyst Nick Gladding. He predicts the technology will be available within the next couple of years.
Rob Standen, national account controller at Video Box Office, the largest supplier of videos and DVDs to independent retailers, says the technology is already here. However, he says that his customers are unlikely to exploit it in the short term. “C-stores themselves are
probably five to eight years off providing downloading services,” says Standen.
One area warranting more immediate attention is the games console market. Retailers are impatient to get hold of the new PlayStation3, scheduled for launch in spring 2006, and the Xbox 360, which will allow users to play online and download music.
The launch date for the Xbox 360 is not yet confirmed. However, Tesco believes it will be in time for Christmas. It plans to stock more than 30 games compatible with the Xbox 360 on its launch.
In another future trend, Intel reports that it is working on the Entertainment PC, which combines a CD and DVD player, video recorder and stereo. It also allows users to access the internet.
The growth of the home entertainment category continued last year, with a rise of 4.1% to £6.92bn [Video Box Office year-end 2004], driven by sales of DVDs and computer and console games.
However, the fiercest battle between the multiples is over online home entertainment, with both Tesco and Asda launching major internet offensives to exploit the ability to sell a huge amount of lines without taking up valuable shelf space.
Market analyst Verdict Research says £1 in every £9 spent online is on music and video, so it’s understandable why supermarkets are so keen to advance in the market.
The latest volley in the online war has come from Asda, which announced at the end of last month that it would put 140,000 CDs, DVDs and games online. The merchandise is being sourced from Jersey in a bid to drive down prices as items of less than £18 from the island come tax-free for consumers.
The move constitutes a direct challenge to Tesco, which began sourcing products from Jersey for Tesco.com in December.
Music and video share as a proportion of all retailers’ total online sales has also grown ahead of the market, says Verdict. The sub-category climbed from 9.5% to 11.4% from the end of 2003 to the start of 2005, with all retailers’ share of overall internet trading rising from 2% to 2.4%.
Away from physical product, the other key focus for the supermarkets in terms of online sales is digital music downloading.
Tesco has led the way, introducing a rival to Apple’s iTunes service in November, and now claims a 10% market share of the legal download market.
The multiple also pledged to drive sales of the hardware for digital downloading as part of a wider push on digital products announced last month. It is introducing fixtures in stores to create more theatre for the items, which include Inovix MP3 players and Apple iPod Shuffle, and encourage customers to browse the shelves.
“The exciting thing about digital is where we can take it in the future,” says a Tesco spokeswoman. “As the technology grows we’ll be able to turn Tesco.com into a digital download store for games, music, videos and film.”
The ability to download feature films will be the next step in the development of the market and retailers are eagerly awaiting it, says Verdict senior analyst Nick Gladding. He predicts the technology will be available within the next couple of years.
Rob Standen, national account controller at Video Box Office, the largest supplier of videos and DVDs to independent retailers, says the technology is already here. However, he says that his customers are unlikely to exploit it in the short term. “C-stores themselves are
probably five to eight years off providing downloading services,” says Standen.
One area warranting more immediate attention is the games console market. Retailers are impatient to get hold of the new PlayStation3, scheduled for launch in spring 2006, and the Xbox 360, which will allow users to play online and download music.
The launch date for the Xbox 360 is not yet confirmed. However, Tesco believes it will be in time for Christmas. It plans to stock more than 30 games compatible with the Xbox 360 on its launch.
In another future trend, Intel reports that it is working on the Entertainment PC, which combines a CD and DVD player, video recorder and stereo. It also allows users to access the internet.
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