First store 1921

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Background on HMV UK

• First store 1921
• Leading entertainment retailer in UK 25 market
  share in audio and DVD
  
• 215 stores in UK Ireland rising to 230 by Xmas
• 2004 Sales of 930m and Operating profit of 95m
• Core values of range, advice, service and value
• Very strong retail platform, operational
  excellence and consumer brand for entertainment
  retailing

Challenge to replicate in Digital
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How does HMV compete?
Using our stores and educated staff, with a
strong technical base and great range.
Brand
Store integration
Brand Leverage
In-store advertising
In-store portable hardware offer
In-store advice
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Critical Success Factors
Customer Service back up
Service Reliability
Full Range
SERVICE MUST HAVES
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Strategic Decision

• Seek to develop a la carte and subscription
  download store
  
• Develop Jukebox digital retail platform (Napster
  / itunes)
  
• Seek technical partners (as skill set non core to
  HMV)
  
• In-store MP3/WMA portable player offer with
  educational element
  
• Longer term in store downloading and service
  integrated with HMV.co.uk (web based app), mobile
  play

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HMV Digital Simple and Friendly
Digital
Permanent Downloads
Subscription Service
Jukebox
Online Radio
CUSTOMERS
In-Store
Jukebox Discs
Digital Zone
Portable Hardware
Hardware Accessories
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Implementation

• Following 6 month due diligence process selected
  Microsoft and MusicNet to be our partners
  
• Microsoft front end build the jukebox
• MusicNet digital warehouse act as storage and
  delivery company for digital catalogue
  
• 9 month project to launch digital store on 5th
  September
  

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HMV Digital Platform

• Consumer PC
• Latest released generation for best entertainment
  experience
  
• Windows XP Service Pack 2
• Windows Media Player 10
• Janus plays for sure devices
• Client Application Windows Forms 1.1
• Looking forwards, upgrade the framework, WPF,
  WMP11

• Service Infrastructure
• Windows 2003 Server platform
• ASP.net 2.0 web site / web services
• SQL Server 2005
• ISA Server 2005
• MOM 2005
• Integrates with existing WebSphere / DB2
  applications via web services

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Live / Launch Tasks

• Commercial terms with record companies focus on
  Indies
  
• Catalogue acquisition and range check
• In store execution new unitary, device
  manufacturers and education for consumers
  
• Marketing campaign
• PR and launch campaign

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HMV Digital Store
Differentiation on pricing and product
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HMV Digital differentiators
sell digital albums AS albums
multiple retail price points
Indie content new to digital
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HMV Live
record performances and sell on HMV Digital
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In-store Launch
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In-store Launch
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OXFORD CIRCUS
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Results?

• Very successful launch with amazing PR
• In the market with a stable jukebox developed in
  only 9 months
  
• Good platform to develop functionality and
  distribution channels
  
• Developed internal knowledge base of MS
  technology and integrate with existing systems

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