When Zavvi collapsed last Christmas, it looked like there was no way back for the High Street entertainment store.
The firm plunged into administration on Christmas Eve – another deadly blow to the High Street after Woolworths suffered a similar fate but weeks before.
Fast-growing online retail specialist The Hut, however, saw something in the Zavvi brand as other firms dawdled, and snapped it up in March. And after trading with the brand for seven months via Zavvi.com, things are on the up.
After UK success, a multilingual website is on the cards. Zavvi.com aims to have over 50 per cent of its customer based in Europe by September 2010.
Despite giving Zavvi a new lease of life online, however, The Hut knows it also has to steer the brand into the next evolution of consumer spending: digital distribution.
The firm got heavily involved in London Games Conference – both sponsoring and attending the show.
“It is important that the industry has a forum where we can shape the future together,” says The Hut’s product director Gian Luzio.
“Together we have to avoid the pitfalls that we have seen take place in the music industry where the labels agreed digital distribution prices that made their whole business model unviable for many large companies.”
Although The Hut is currently very much a boxed product business, the firm has an eye on the future. In a shock admission, Luzio candidly admits that the firm will launch its own streaming and download service in future, “across all entertainment formats including books, music, games and movies” – a sure-fire indication that this company has no qualms about upsetting the apple cart when it comes to traditional relationships.
In the short term, The Hut is very keen on the idea of selling Xbox Live and PSN points – something which has already been adopted by US retailers such as Amazon. Luzio believes that the games industry is at a critical time, whereby it can avoid the retail monopolisation that Apple enjoys in the music industry.
“We should try and get a free market in games digital distribution,” asserts Luzio. “iTunes cornered the music distribution market and they are solely responsible for the problems the music labels are facing.”
Despite his certainty that The Hut needs its own digital distribution platform, however, Luzio is not naïve enough to think he has the sector’s future fully mapped out.
“The digital distribution of games and the current business models are in their infancy,” he adds. “There will be more advanced models coming over the next few years that will enable people to play the same game on their mobile phone, portable gaming device and console – and interact with everyone on it.”
Before that point, The Hut is – like any good businesses – concentrating on making money and helping expand the market today. Over and above digital distribution, it believes (in typical maverick fashion) than the games industry is missing a very simple trick.
Luzio concludes: “The industry is very poor at maximizing retail opportunities compared to film. A clear example of this is the recent Monster vs Aliens release on DVD. I bought the DVD, the plush toy, the bed spread, the pyjamas and the stickers and my two-year-old son is extremely jealous. My point being is that the games industry should focus on maximising merchandising opportunities.
“Despite Call of Duty possibly being the biggest selling game of all time this Christmas I am convinced I will not get a duvet set, a plush toy, the t-shirt a book or any other merchandise from the high street or online.
"We all want more people to be playing more games and digital distribution will be a great channel to assist this but to increase revenues and brand awareness we all need to work together in retail and publishing and be more innovative.”
Companies currently profiting from boxed products will need to be forward-thinking, brave and no-nonsense to fully take advantage of the digital revolution; a plate it seems The Hut will have no problem stepping up to.