B&N Reports Digital Revenues Down over 50%

B&N Reports Digital Revenues Down over 50% Barnes & Noble Barnes & Noble released their latest quarterly report today, and it has both good news and bad news. While revenues continue their decline, the company lost less money than last year. Nook Media, on the other hand, continues its nosedive into oblivion.

In the first fiscal quarter, B&N reported that company revenues decreased 7.0%, to $1.2 billion, as compared to the prior year. The consolidated first quarter net loss was $28.4 million, or $0.56 per share, compared to a net loss of $87.0 million, or a loss of $1.56 per share, in the prior year.

B&N Reports Digital Revenues Down over 50% Barnes & Noble

B&N's retail division had revenues of $955 million for the quarter, down 5.3% from the prior year. B&N attributed the decline to "a comparable store sales decline of 5.1% for the quarter, store closures and lower online sales", and blamed it on a decrease in sale of Nook products.

Revenues from B&N College were $226.1 million, which was only a minimal change from last year. The flat growth was probably due to additional stores being opened; comparable store sales decreased 2.0% for the quarter.

All in all, B&N's retail efforts aren't doing terrible, but then there is the news for the Nook division. B&N reported that Nook revenues dropped by over 50% compared to the same quarter last year.

B&N Reports Digital Revenues Down over 50% Barnes & Noble The Nook segment (including digital content, devices, and accessories) had revenues of $70 million for the quarter, down from $155 million a year ago. Hardware sales accounted for $18 million for the quarter, a decrease of almost 80% from a year ago. Digital content sales also continued their decline, totaling $52 million for the quarter - a drop of 24.2% compared to a year ago.

But in spite of the bad news, there is some light n the horizon. B&N recently launched a new Galaxy Tab 4 Nook device in partnership with Samsung. This should boost sales in the coming quarters.

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

28 Comments

  1. Feda9 September, 2014

    Nothing will boost their sales. Slow death by closed ecosystem and DRM is what’s coming at them. They don’t have the power of Amazon to survive it.

    Reply
  2. Julez Brooks9 September, 2014

    Feda you do know the nook has full access to google play now I don’t see it being a closed ecosystem I think it has been like that now for what two years or more. As for the decline in nook sales i see that coming from hardware and accessories sales since the simple touch and hd/hd plus devices were discontinued.

    Reply
    1. Feda9 September, 2014

      I’m mostly referring to their digital sales, not hardware. They are clearly out of the hardware business anyway. As far as I’m aware, most, if not all of the books they sell are locked by DRM and tied to their store. Same story as Amazon. That means that they are not offering an alternative to Amazon, they are trying to compete in the same business and I don’t see them succeeding there.

      Reply
      1. fjtorres9 September, 2014

        The problem with that view is that the use of DRM is a publisher choice, not a Nook (or Amazon) decision. Nook sells plenty of DRM-free titles, just as Amazon does.
        Where Nook has a choice is in ebook pricing and indie-friendliness. And they have fumbled both.

        Reply
        1. Purple Lady10 September, 2014

          Wasn’t it B&N’s choice to use a drm that is incompatible with all eink readers but their Nook readers? They could have used standard ADE.

          Reply
      2. flyingtoastr9 September, 2014

        You still seem to have BN confused with your beloved Amazon.

        The BN DRM is not only fully compatible with any Adobe ADEPT EPUB reader, but also fully self contained on the file with no requirement for outside authentication. It’s easily the most permissive DRM of the major formats.

        Reply
        1. Feda9 September, 2014

          I only bought a singe e-book from Amazon, and that was my last one after figuring out how they system works.
          It looks like I don’t have a clue as how BN e-book market works but that speaks volumes about perceptions some may have about BN and why they won’t become their customers.
          I agree with DRM being a publishers choice. The problem is, at least with Amazon, and from little of what I have seen on BN is that it is very unclear weather a book is DRM locks or not, and when in doubt I just don’t buy it. There are plenty of other choices.
          It doesn’t matter how permissive a specific DRM may be, I would not buy a DRM locked book, or music or pretty much anything else any more.

          Reply
          1. fjtorres9 September, 2014

            Uh, Amazon ebooks generally tell you when they are DRM-free:
            “Simultaneous device usage: unlimited”.
            http://www.amazon.com/gp/product/B008XT3QOW/ref=s9_ps_bw_d99_g351_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=merchandised-search-3&pf_rd_r=1FCKR6P4J5D961VP739W&pf_rd_t=101&pf_rd_p=1721361442&pf_rd_i=154606011

            Some publishers, like BAEN, add a line to the book description that says it is DRM-free:
            “At the publisher’s request, this title is sold without DRM (DRM Rights Management).”
            http://www.amazon.com/Vorpal-Blade-Looking-Glass-Book-ebook/dp/B00AP9477S/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1410294062&sr=1-1&keywords=vorpal+blade

            And then, pretty much every encrypted-DRM Kindle or Nook ebook can be rendered DRM-free with ease.

            Nate has a tutorial round these parts.

            Reply
          2. Sturmund Drang9 September, 2014

            Stick to your guns, Feda. It’s my understanding B&N encrypts your credit card information into the DRM key. And given B&N’s other process failures you can judge how safe that might be. I’d like to be a B&N fan, I really would; they just make supporting them too difficult.

            Reply
          3. Feda10 September, 2014

            I don’t see the simultaneous use line anywhere on the page you linked. Baen titles on Amazon are hit or miss with the DRM notice. I have seen it only on a few of them.
            Removing DRM from files is illegal.

            Reply
          4. fjtorres10 September, 2014

            It’s in the product details, along with file size and stuff:

            Product Details
            File Size: 264 KB
            Print Length: 143 pages
            Page Numbers Source ISBN: 1475020643
            Simultaneous Device Usage: Unlimited
            Publisher: eStar Books (August 14, 2012)
            Sold by: Amazon Digital Services, Inc.
            Language: English
            ASIN: B008XT3QOW
            Text-to-Speech: Enabled
            X-Ray:
            Not Enabled
            Lending: Enabled

            What browser do you use? Might be a rendering issue.

            Reply
          5. Feda10 September, 2014

            I see it now. I don’t think I would have interpreted that as DRM free if you haven’t mentioned it. Still, you can only download it to Kindle.
            I’ll stick with places where you have file type choices and where you can simply download your book in any format you like to wherever you like.
            But thank you for the explanation.

            Reply
        2. Purple Lady10 September, 2014

          It’s not compatible with my Sony PRS 950.

          Reply
  3. Syn9 September, 2014

    If B&N aren’t getting the sales, and Kobo claims dropping agency is hurting their sales, where are people buying? Isn’t digital book sales increasing across most (except Ellora’s Cave and Hackett maybe) publishers? Maybe Amazon and Apple have an even bigger chunk of the market.

    Reply
    1. Feda9 September, 2014

      I can’t speak for others but I get most of my books from Baen Books and Smashwords. I’ve also been picking up a lot of book bundles lately from places like Humble Bundle, Story Bundle and Phenix Pick.

      Reply
    2. fjtorres9 September, 2014

      Maybe Google is becoming relevant…

      Reply
  4. Julez Brooks9 September, 2014

    The bundle thing is what BN should have tried years ago but look what happened other companies beat them to the punch. I think William Lynch their former CEO doomed nook from day one. Here is hoping this new CEO and Samsung deal changes everything for the better. I have hope for them if they play their cards right.

    Reply
  5. fjtorres9 September, 2014

    Red flags in the morning:

    – $18M in hardware works out to ~150k units per quarter or ~600k a year–they are now committed to selling a million Samsung tablets.

    – $52M in digital content works out to ~$200M a year — with ebook sales running well north of $2B, that puts Nook market share in the single digits. When Kobo was sold they claimed “high single digit” market share but were experiencing growth, not decline. Not sure a Nook sale would bring in much cash…

    The good news is the next quarter is the holiday buying season so they should at least see quarter-to-quarter growth. Year-to-year growth, though, looks to be a challenge.

    Reply
    1. flyingtoastr9 September, 2014

      Summer is always the slowest sales period for any retail.

      Also, BN hasn’t had a whole lot of devices available for sale for the quarter. The HD+ has been flat out unavailable online for months, and IIRC there were only 8GB HD in a single color for a while. That’s how sell downs work.

      Reply
    2. Nate Hoffelder9 September, 2014

      I think the bigger problem for B&N is that they are in a glutted tablet market. That is going to hurt them more. If not for the market (and the fact B&N is competing with their own supplier) I think they could come close to selling a million tablets.

      But other than that I agree with your numbers. Of course, I was the first to not that B&N’s market share had slipped (close to a year ago, actually).

      Reply
      1. fjtorres9 September, 2014

        Of course, we all remember what happens to glutted gadget markets…
        …the bubble pops…

        It can get bloody if this xmas doesn’t shine.

        Reply
  6. Alexander Inglis9 September, 2014

    Actually, the next quarter does not include holiday sales: it is Aug, Sep and Oct. So that’s likely more bad news before good news released in their March report (ending Feb 28).

    The whole “closed ecosystem” argument no longer really applies since many folks read on tablets, not exclusively on dedicated eink readers. Once you have a tablet, you can plunk down Google, Kindle, Kobo, Nook and Overdrive onto one device. It really doesn’t matter if the stores are DRM or not.

    Nook had a small window to build out internationally — and they might have been a good partner for Sony to help kickstart that. However, their deal with Microsoft, pinning their hopes on Windows 8 launch, blocked that avenue. Nonetheless I do find it striking how digital content sales continue to shrink. I wonder what the real exist strategy is?

    Reply
    1. Nate Hoffelder9 September, 2014

      “Nonetheless I do find it striking how digital content sales continue to shrink.”

      It’s a sign that consumers have no confidence in the Nook brand any more. At this point I wonder if B&N’s best option is to sell off the tech as scrap and simply walk away.

      Reply
      1. fjtorres9 September, 2014

        Since Kobo isn’t reporting any US gains, I’m starting to wonder if B&N’s more recent lost market share might not be going to google.
        There aren’t any other generic epub vendors big enough to absorb all the defectors. NOOK reader owners have to be getting their ebooks from somewhere…

        (They can’t *all* have hacked the readers and installed Kindle…)

        Reply
        1. Nate Hoffelder9 September, 2014

          They gotta be going somewhere, and yes, Google is a possibility.

          Reply
          1. Fbone9 September, 2014

            Google has MFN also so they often have the same prices as Amazon.

            Reply
  7. Timothy Wilhoit9 September, 2014

    I was trying to remember why Q1 2014 was so hideously bad. Wasn’t that the quarter that B&N wrote off the entire HD line as a loss on their books? If that’s the case, any HDs sold in subsequent quarters should be all profit, yes or no?

    Reply
    1. Nate Hoffelder9 September, 2014

      That was one of the two quarters, yes.

      Reply

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