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Best Buy Q2 Same-Store Entertainment Sales Plummet 30%

20 Aug, 2013 By: Erik Gruenwedel

Best Buy Co.’s transition from physical to digital distributor of entertainment software such as movies, music and video games was notably reflected by a near 30% drop in second-quarter (ended Aug. 3) same-store entertainment sales.
The Minneapolis, Minn.-based No. 1 consumer electronics retailer, which has previous announced it would scale back shelf space devoted to packaged media, said entertainment sales represented just 5% of its $7.8 billion domestic quarterly revenue, compared with 8% during the previous-year period.

Same-store entertainment sales dropped 22.1% last year.

In addition to Napster, Best Buy owns and operates CinemaNow.com, which offers digital sellthrough with UltraViolet functionality. It also markets physical discs at BestBuy.com.

Indeed, comparable digital revenue increased nearly 11% in quarter, due in part to pre-orders for next-generation video game systems from Microsoft and Sony. Domestic online revenue was $477 million.

Meanwhile, much of the floor space devoted to packaged media has been subcontracted to Samsung and Microsoft for proprietary store-within-a-store departments dubbed “Samsung Experience Shops” and “Windows Stores,” respectively.

In a fiscal call, Best Buy CEO Hubert Joly said the initial rollout in about 250 stores has been good.

“We are seeing ... very positive customer response,” Joly said. “The same with Windows, but of course Samsung started earlier. The customers really appreciate the live displays, that you can actually touch and feel live product, which is not the case for other types of stores.”

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