Where Next For Nook?



When it comes to indecisive it doesn’t get much worse than the management of Barnes & Noble and what they are going to do with Nook.

As of summer 2014 it was definitely being sold off, and summer 2015 was the deadline. (LINK)

As of late February of this year it was definitely being kept. (LINK)

As print sales settle after the early disruption of digital it’s clear retailers like Barnes & Noble, along with the big publishers, are feeling more relaxed and confident than at any time since 2011-12, when one struggled to find an industry blog that wasn’t full of doom and gloom about publishing’s future.

How thing’s change.

There’s a new vibrancy and confidence in the industry as the shake-out’s new landscape becomes clear. Print sales are doing just fine, book stores are thriving. And ebook stores are thriving too.

Yes, there have been casualties. In the ebook field small players like Diesel, that simply couldn’t hack it, and unexpected casualties like the Sony Reader Stores and Tesco’s Blinkbox, both sacrificed because of problems at the parent companies.

And then there’s Nook.

While the Kindle store has probably been profitable for a good few years now (humungous market share in the US and UK, assisted by subsidized ereaders and tablets) Kobo is only expected to break even later this year, and Nook, while seeing its losses dwindle, is still far from profitable in its own right.

But with US market share at around 10%, tucking in behind Apple, Nook still is a significant player, and still has a lot to offer.

Barnes & Noble could, if Nook was such a dead loss as the naysayers would have us believe, simply call it a day, write off the Nook legacy, and move on. There is absolutely no point piling on the losses if there is no knight in shining armour on the horizon to rescue this damsel in distress.

So why hasn’t B&N just called it a day and shut shop?

Our guess is that B&N do see a knight in shining armour on the horizon. One (or one of several) with deep pockets and big ambitions, but not yet in a position to make a move. Perhaps they have already signalled interest. Perhaps B&N are just smart enough to see the way the wind is blowing.

You see, no matter how much we indies (and sadly it is largely we indies – still locked into this arcane us-and-them mentality that sees print publishers and print retailers as the enemy) ridicule Nook, the fact remains that Nook is a close-to-profitable business with a lot to offer a prospective buyer looking to gain a significant foothold in the US digital media market.

Not just a substantial customer base (who wouldn’t want 10% of the massive US market in a single grab?), but the marketing contacts and infrastructure (both US and UK publishers), and the not insignificant global potential.

At one stage Nook was fielding thirty or so international ebook stores, albeit only with a Windows 8 app. But it means they had the contractual infrastructure in place with publishers in those countries.

Nook also has a functional self-publishing portal across several countries and, slightly more controversially, a print and publishing services arrangement with Author Solutions. Plus of course some nominal digital media action beyond the ebook element.

Then there’s the existing range of Nook hardware in readers’ hands and the contractual infrastructure in place with manufacturers to build on same.

All of which collectively amounts to a significant package for a forward thinking, globally-minded, deep-pocketed operator with an eye on the US and international digital media markets.

Who might that be? Here at EBUK we’ve long been warning that the centre of digital gravity is shifting east, and it from the east we feel that Nook’s knight in shining armour will most likely come.

B&N’s management will not be unaware of the manoeuvrings of the big Chinese e-commerce titans as they gear up for global domination. If Alibaba is leading the pack right now, expect Tencent and JD among many to be not far behind.

And then of course there’s Rakuten, across the water in Japan. Any thoughts that Rakuten was regretting its buy-out of Kobo and was writing off ebooks were laid firmly to rest when Rakuten bought out the US and global digital distributor OverDrive earlier this year.

Nooks’ 10% US market share would make a fine addition to Rakuten’s US Kobo and US OverDrive presence, as well as both company’s substantial international reach.

The OverDrive buy-out, along with the plans for Viber, make very clear Rakuten’s vision for a digital future. More on the latter in another post shortly.

B&N’s management will surely be looking at these up-and-coming players – any one of which could buy Nook (and B&N itself) out of pocket change – and see the potential for a lucrative sale down the road if it can just get Nook back on the right path.

Getting by with Nook for another year, as B&N now appear to be intent on doing, may be more sensible than it at first appears.


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One response to “Where Next For Nook?

  1. Pingback: Top Picks Thursday 04-30-2015 | The Author Chronicles

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