Pottermore counts cost of strategy shift

J K Rowling’s Pottermore website reported a dramatic fall in sales in the period immediately before its planned summer relaunch, according to accounts filed at Companies House. But a spokesman for the business said the company would see a "healthy period of growth" in 2016, with deals now in place with Blackwell’s, Amazon’s Audible and Apple to sell e-books, audio-books and enhanced Harry Potter e-books.

Blackwell’s has effectively become the first retailer to sell the Harry Potter (non-enhanced) e-books direct, announcing the move over Christmas. When it launched in 2012, Pottermore was the only place where readers could buy the Harry Potter e-books and digital audiobooks, but while Amazon continues to direct buyers to the Pottermore website, it is understood that this strategy has now been sidelined.

Pottermore spokesperson Mark Hutchinson confirmed to The Bookseller that conversations were in the pipeline "with a range of retail partners around the world" to sell the Harry Potter e-books, with a number of retailers expected to come on board during the course of the new year.

Pottermore c.e.o. Susan Jurevics used her speech made at the FutureBook Conference in December to say that the company wanted to extend its retail partnerships in order to “grow Pottermore’s digital retail footprint, and give consumers more choice in where and how they purchase and consume our content.”

The site, which gives Harry Potter fans an enhanced experience of J K Rowling’s wizarding world, along with new short stories, insights and games, relaunched in September with a new mobile-first search-friendly format. Before this, in the year ending 31st March 2015, sales dropped by £24.8m – or 352% - to £7m (from £31.8m a year earlier), while profit at Pottermore also decreased significantly, from £14.9m in 2014 to a loss of £6m in 2015. Staff count at the company also fell, from 40 to 30 in the period to March 2015, according to the accounts.

The reason given for the drop in turnover was the termination of an affiliate agreement –believed to be with Sony - which ended the previous year and which accounted for £24.5m of 2014’s turnover. Pottermore and Sony ended their partnership in April 2014. At the time, Pottermore said its relationship with its "primary commercial partner", which provided creative and commercial support for the site, had been "successful". The deal with Sony was announced ahead of the original launch of Pottermore, but although two Harry Potter spin-off products were launched on Sony's PS3 Wonderbook augmented reality platform, and were initially succesful, that platform has since been discontinued.

A note in the company accounts regarding the drop in turnover said: “The decrease is primarily the result of an affiliate agreement terminating in the previous year under which the company was guaranteed a minimum level of royalties. As such royalties received under the agreement during the previous year amounted to £24.5m. The balance received in the current year is nil.” At the time, the company's c.e.o Susan Jurevics said Pottermore was "extremely well-positioned to build upon its success and enter its next phase in its development both creatively and commercially.”

Despite the drop in staff numbers, the company is continuing a planned recruitment drive, with the focus of creating an in-house team and reducing reliance on third party suppliers, the accounts also revealed. “This allows the creation of a strong foundation of skill sets and has provided a sold team to build on further in developing the business, streamlining processes and enhancing the site,” the document said.

Despite the 2015 financial loss, Hutchinson, who handles the PR for J K Rowling and Pottermore, told The Bookseller that the company would see a "healthy period of growth" in 2016.

“…Pottermore has just completed a period of re-launch and visual rebrand, and is now a more accessible and mobile friendly experience.  The figures you have obtained from Companies House don’t reflect the healthy, forward-thinking business that Pottermore currently is…”

The Pottermore website re-launched in September 2015 with a focus on a mobile experience, targeting young adults, including more gaming elements and allowing its content to be indexed by search engines. For the first time, the website also contains reporting and features by a “Pottermore Correspondent”, a team of journalists dedicated to reporting on all the latest updates going on in the Wizarding World.

Hutchinson added that while 10 staff have left Pottermore, “a number of key staff in a variety of positions, from data analytics to copywriting, have been recruited in the past year with skill sets appropriate to the new, more agile site.” He added: “2016 is set to be an exciting year and a healthy period of growth."

Sony had not responded to requests for comment by the time this article went to press. Before she joined Potter, Jurevics was a senior vice president with Sony.