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After years of struggling to compete with the likes of Amazon’s Kindle business, Barnes & Noble is moving forward on a plan today to split off the company’s Nook Media business from its retail segment.
Barnes & Noble first launched its Nook ebook reader back in 2009 as a way to take advantage of growing consumer interest in digital books. The company later produced and launched a line of low-priced tablets as well as a digital media store for books, movies, games, and TV shows. But the Nook struggled to take off among consumers, leading the company to rethink its strategy by pushing Nook operations into a joint-venture (called Nook Media) with Microsoft and textbook publisher Pearson.
Now, Barnes & Noble is once again shifting its strategy for Nook Media by breaking it off from its retail business. The Nook business saw revenues decline by 22 percent to $87 million last quarter, and it saw a 19 percent revenue drop for digital content sales to $62 million, a decline that didn’t seem to be improving fast enough despite some major changes to the business. The split comes a little over a month after Barnes & Noble announced that it would be partnering with Samsung to build its next-generation tablets rather than produce its own.
“We have determined that these businesses will have the best chance of optimizing shareholder value if they are capitalized and operated separately,” said Barnes & Noble CEO Michael P. Huseby in a statement. “We fully expect that our Retail and Nook Media businesses will continue to have long-term, successful business relationships with each other after separation.”
The decision to split the two businesses seems like the best course of action. Anyone with a set of eyes can see how much the overall Nook platform has floundered over the last two years. For example, it took the Nook until April 2013 to enable in-app purchasing (and even then, it did this through Google Play). And as you can see from a quick scan of Nook news dating back to 2011, Barnes & Noble has consistently dragged its feet when it comes to adding new features and new functionality to the Nook platform.
Basically, the Nook is perpetually the last one to show up for the party. If the Nook platform was a grade school student from the ’90s, it would be that kid bragging about his new pair of Reebok Pumps when everyone else had already moved on to the much cooler L.A. Lights.
Hopefully, the split will give Nook Media the kind of maneuverability and fresh leadership it so desperately needs to start seriously competing with the likes of Amazon, Apple, and Google.
Barnes & Noble, Inc. (NYSE:BKS), the world's largest bookseller and a Fortune 500 company, operates 704 bookstores in 50 states. Barnes & Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes & Noble, also operates 635 co... read more »
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