TESCO ON THE FUTURE OF ENTERTAINMENT RETAIL Food for thought
So Tesco is all about cutting prices and selling more carrots, right? Think again. The firm’s entertainment team wants to help sell digital content in its shops. Christopher Dring meets entertainment chief Rob Salter to find out more
OF ALL THE things you expect Tesco to talk about, cloud gaming, the digital future and saving physical product is not amongst them. Those are the topics you imagine GAME to harp on about at its next strategy update. Not the head of entertainment at a retailer that’s primary business is in fruit and veg. But that’s exactly what Tesco’s entertainment boss Rob Salter wants to discuss with MCV today. And that’s because he has spent the last year doing his utmost to protect what’s left of the ailing music market, whilst backing cloud movie streaming service, Ultraviolet. The idea, he says, of selling licences and not discs, is something that doesn’t just apply to CDs, but to the whole gamut of entertainment – games and movies included. “The threat is more immediate in music,” he tells MCV. “And gaming has been in growth and it hasn’t had the same inherent problems that the other markets have had. “But at some point, I think it will.”
ULTRA WHAT?
One new development Salter’s keen to talk about is Ultraviolet, a new ‘standard’ in streaming movies.
MEET THE NEW BOSS
SARAH KAYE has been waiting to take the games hot seat at Tesco for over six months. She was recruited from Activision in June last year to eventually succeed former games chief John Stanhope. Stanhope is part of Tesco’s director development
programme and as a result was recently tasked with leading the supermarket’s toy department. Kaye is now focused on picking up where Stanhope left off, and is reaching out to publishers to help make Tesco a more credible games force: “Our business is going to
20 April 22nd 2011
develop by building a more credible range and giving people a reason to come to Tesco that isn’t all about price. I think we’re getting there. The market is in a challenging place and I feel we are better positioned than most retailers to add value to the market, rather than simply share shift. “With recent innovations such as Move and Kinect, the industry has a broader appeal than ever before. The key challenge we all face is how we engage more mainstream consumers. My message to publishers is: come to us with
Tesco’s new games boss Sarah Kaye joined the firm last year
solutions about how you want Tesco to deliver your message. You are the experts about your products. What you will get from Tesco is a real appetite to work with you to market that message to a new audience.” Under Stanhope Tesco has doubled its share in games. But entertainment boss Rob Salter feels there’s still more to grow and add. “We’ve doubled our position but I think we are only half way to where we could be,” he says. “I think that if we get that growth then it will be additive to the market.”
www.mcvuk.com
Most major movie studios have already signed up to it. The idea is that hardware manufacturers of PCs, mobiles, TVs and so on will incorporate Ultraviolet tech into their devices.
That way retailers can sell a DVD that comes bundled with an Ultraviolet licence, allowing consumers to buy the disc and also stream it to the hardware device of their choice.
“What do people do today when they buy a disc? They buy it, consume it and then share it with their family,” says Salter. “Ultraviolet addresses how we recreate that flexibility of experience when there is no actual disc. The idea is that consumers can register a defined number of users, and then they can register up to 12 devices they want to stream that experience to – be it an Xbox or mobile phone.” Salter says bundling licence with physical product should be applied to music, too.
“When you buy a music CD you’re not supposed to rip it, you’re actually breaking copyright by doing that. But the masses are doing that. So we can either ignore it and pretend it doesn’t happen, or
acknowledge it and make it part of the proposition.
It is worth looking at things differently in terms of how people purchase games.
“ Rob Salter, Tesco
“Publishers are very cautious. And even the notion that they have lost the opportunity to sell you something twice is a tough one. But that isn’t the problem at the moment. The problem is selling the product in the first place. “I have suggested that in music we come up with a package where what we are actually selling is a licence – a bundle of rights – and the disc we are putting it with is an incidental free gift. And I think that might prolong the life of the CD.”
SAVING MUSIC
Salter has been active in his attempts to rescue packaged music. He says that in ten years he has seen the space dedicated to CDs more than halve within the supermarket, and he has been working tirelessly to stop that declining any further. The entertainment team even launched exclusive albums – such as Girls Aloud singer Nadine Coyle’s debut record – in a bid to drive customers to its CD department. But the big thing record companies can do, Salter says, is change how physical albums are distributed.
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