HMV diversifies into cinemas

Here is a great example of business diversification and growth through joint venture. HMV is entering into a joint venture with cinema chain Curzon Artificial Eye to open a cinema called hmvcurzon above its Wimbledon store.

If successful the scheme will be rolled out to many of their larger stores including some of the bigger Waterstone’s branches. The cinema will be accessible to customers during normal trading hours through the HMV store, but will have a separate entrance for when the store closes. Profit margins for book and music retailing have come under huge pressure in recent years prompting HMV to invest heavily in promoting live music events and now an attempt to break into the oligopolistic cinema sector.

The UK cinema industry has enjoyed robust growth in recent years despite (or perhaps partly because) of the economic downturn.

In 2008, total annual UK cinema attendance reached £164.2 million, a 1.1 per cent increase on 2007, with an increase in box office of 5 per cent, reaching some £949.5 million. The industry is an oligopoly with three chains dominating more than 80 per cent of total turnover.

The top three chains are Odeon, Vue and Cineworld - the first two are owned by private equity businesses, the latter is the only listed cinema chain in the UK
The main chains are:

AMC Theatres
Apollo Cinemas
Cinema de Lux
Cineworld
Empire Cinemas
Odeon Cinemas
Picturehouse Cinemas
Showcase Cinemas
Vue Cinema