The encyclopedia · Strategy & Leadership · Strategic decision · 2007–2019
HMV sold music for 92 years — then the format itself died
Britain's oldest music retailer went into administration with £110M debt as CDs and DVDs became a business nobody needed any more.
HMV · 2013-01-15
What happened
HMV (His Master's Voice) was founded in 1921 and grew to over 320 stores at its peak in the 1990s, making it Britain's dominant music and entertainment retailer. The company sold CDs, DVDs, and video games from high-street locations across the UK. By the late 2000s, digital downloads and streaming were destroying the physical entertainment market, and HMV had no credible digital strategy.
HMV entered administration on 15 January 2013 with £110 million in debt and £20 million in unpaid tax. The collapse put 4,350 jobs at risk. Hilco Capital acquired the chain for an estimated £50 million in April 2013, saving 141 stores and 2,500 jobs. The company survived another five years before entering administration again on 28 December 2018, when Sunrise Records acquired it for just £883,000.
The second rescue was smaller: 27 stores closed immediately, including the flagship Oxford Street branch. The company survives today as a much-reduced chain, but the core lesson is the same: a business built on a physical format cannot survive when the format itself becomes obsolete.
Why it happened
- Its entire business model was selling physical music and video formats — CDs, DVDs, Blu-ray — in stores. Digital downloads and streaming made the format itself obsolete, not just the retailer.
- The company failed to build a credible digital business while the physical market was still profitable, leaving it with no revenue stream when the format decline accelerated.
- The high-street real estate model meant high fixed costs — rent, rates, staff — that could not shrink fast enough to match the revenue decline from physical media.
The lesson
When the format dies, the retailer dies with it. There is no pivot from physical music retail to digital music retail — they are different businesses.
Sources
- BBC News — HMV poised to appoint administrators
- BBC News — HMV collapse: What went wrong for the music chain?
- BBC News — HMV rescued by Sunrise Records in deal saving 141 stores
- BBC News — HMV: The highs and lows of the high street giant
- BBC News — HMV failed to adapt to digital age, say administrators
- Wikipedia — HMV
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