Barnes & Noble Tries To Un-Titanic Nook Media

Barnes & Noble Reports Fiscal 2014 First Quarter Financial Results

The NOOK segment, which consists of the company’s digital business (including devices, digital content and accessories), reported revenues of $153 million for the quarter, a decrease of 20.2% from a year ago. Device and accessories sales were $84 million for the quarter, a decrease of 23.1% from a year ago, due to lower unit selling volume. Digital content sales were $69 million for the quarter, a decline of 15.8% compared to a year ago, due in part to lower device unit sales as well as the comparison to The Hunger Games and Fifty Shades of Grey trilogies. Excluding the impact of these two titles, digital content sales decreased 6.9%.

And, Michael P. Huseby, President of Barnes & Noble, Inc. and Chief Executive Officer of NOOK Media:

The company intends to continue to design and develop cutting-edge NOOK black and white and color devices. We will continue to offer our award-winning line of NOOK products including NOOK Simple Touch, NOOK Simple Touch with Glow Light, NOOK HD and NOOK HD+ at the best values in the marketplace. At least one new NOOK device will be released for the coming holiday season and further products are in development.

If they’re still running the production lines for the Nook HD and HD+, they should be fired. Those products are long in the tooth and even selling them at discount is a real disservice to customers.

If they’re going to continue to sell them to year’s end — up against new Kindle Fire and iPad models — they’re just psychotic. Do they want to continue to lose money on each sale? Is the plan to keep discounting out of desperation?

One new Nook this year? It will likely be an eInk HD screen. Has anyone been waiting for that?

In the conference call, they touted the success of Nook Press, their self-publishing service. What no one is asking is what the average selling price of a self-published Nookbook is versus one put out by the Big Five and other publishers. If you’re selling a lot of $1.99 Nookbooks instead of ones for $6.99 from corporate publishers, what kind of future do you really have? Sales decreased 8.9% for the fourth quarter and now they’ve declined again 6.9%. If Nook Media content was the future, shouldn’t sales keep going up?

They also acknowledged in the call that most Nook Media content sales are to device owners. Again: What the hell are they doing to get iOS and Android users to buy from them? And do they really think they can compete against the Kindle app on those devices for eBooks and go up against Netflix, iTunes, and others for video? Those sales decreases in the past two quarters are likely people burning their meager investments in Nook content and switching to better devices. And that will continue to happen.

And that’s why they can’t drop tablets or even eInk devices entirely: They can’t sell Nook Media content on other devices. Their customer base is probably 99% Nook device owners. Lock-in. They created a trap for customers that’s now trapped them. They acknowledged that Nook Media sales to other devices is negligible. So where’s the future? What’s the end?

The bottom line of B&N is that they can’t get rid of Nook Media because no one will take it. So they’re hanging on and hoping lightning will strike. Lightning called Windows 8 on PCs and tablets.

Good bloody luck with that plan. If you can call it a plan.

Previously here:

Nook Media Deletes William Lynch
Nook Media: A Sinking Ship


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