Hollywood or bust

Hollywood or bust

As electronics giant Dixons dives into the movie market, the company tells Andrew Mernin the story behind its journey to Tinseltown.

It may not have made much of a splash in media land or been accompanied by the same pomp and panic that comes when an Apple-branded slab of plastic and metal hits the market. However, today’s launch of KnowHow Movies – the new home movie service from retail juggernaut Dixons – marks a significant shift for a company more exposed than most to the whims of the high street spendthrift.

“We wanted to give the customer the choice to do what they want and to solve many of the problems they currently face,” Dixons Retail’s Gary Hearns tells BQ. Perhaps such diversification will also help solve the firm’s own quandary of how to maximise internet-driven revenues.

But with Apple, BT, Sony, Sky and smaller players like LoveFilm and Netflix all playing the movie game, where does Dixons fit in?

Hearns believes its ultimate success will be driven by its pay-per-view, rather than monthly subscription, model. He also refutes the suggestion that the market is already flooded.

KnowHow Movies enables customers to choose from a library of films and TV shows directly from their TVs, smart phones, laptops and tablets. The service has been given added kudos by securing the backing of major film studios including Warner Bros and Disney.

While there will be no mass advertising campaign on TV, Dixons will take advantage of the reported 19 million customers who visit and transact at its Currys and PC World stores every year. Each of the reported 4.5 million connected devices it sells annually will also come preloaded with the movie service’s software.

“Our focus is on converting the massive footfall, fingerfall, and device purchase we have. We already have millions of customers visiting us every week. It is about converting them to digital on-demand,” says Hearns.

Dixons is not the first retailer to spot an opportunity in film, with Tesco also offering a digital streaming service through BlinkBox, in which it holds an 80% stake. So why now for Dixons? “Because all the key elements are falling into place [in terms of] devices, broadband speeds, connectivity, studios embracing digital and we are starting to close in on the tipping point when this goes mainstream,” Hearns says.

“Launching in a year's time would be too late and launching a year ago would have been a little too early.”

Inevitably the current economic climate will dictate how well the service performs in its initial months. Like supermarket alcohol, video games and loungewear, however, it is geared up towards the cash-conscious consumer’s night in.

“If people stay in more during tough economic times, then staying in on a Saturday night and being able to watch whatever you want, whenever you want is surely a good thing.”

A key element of the service, according to Hearns, is the fact that movie fans will be able to see content up to eight weeks earlier than through most other service providers because of its tie-ups with several heavyweight film production houses. And, even in an age in which illegally downloaded content is widespread, exclusivity remains a major selling point.

“Subscription services have a delayed window. So it is an advantage against some competitors where the customer wants to get the latest releases. There is a demand - look at what is happening in the music world, where piracy was is rife, but is now subsiding, with great services like Spotify and iTunes. The vast majority of customers don't want to download illegally, they want great services that give them what they want.”

Time will tell whether there is room in an already-crowded market for KnowHow Movies. In the future, meanwhile, Dixons may consider stepping further into the entertainment market with a dabble in music.

“We evaluate each area, understand the attractiveness of the market and how our business model would support entry into that market. In some cases we do it ourselves, in others we partner.

“Suffice to say there is more to come in the content area. We evaluated film over 18 months ago and worked out how things would go, and started the work to get us where we are today. Launching these services is not an easy thing to do.”