HMV struck a positive note today – the retailer is expected to return to profitability next year, and Game’s problems have helped it soak up market share.

The positivity was perhaps surprising, because there are few signs to suggest things will pick up permanently. Plus, losses in the year just ended will be greater than expected at £16m rather than the forecast £10m, and total sales fell 19%.

The next quarter will be crucial for HMV in terms of market share, says Craig Armer, consumer research manager at Kantar Worldpanel, as the full effect on the market of Game’s demise becomes clear. He adds HMV is still coming under market share pressure from Amazon and the grocers.

In the longer term, says consultancy Conlumino director Neil Saunders, it’s the same old story. There is little in the figures to suggest HMV can do much to resist the continuing digital onslaught.

“The elephant in the room is that with every year that goes by, more and more of its core market in music, film and gaming is going digital,” Saunders says.

He fears that the business as it stands, with its nationwide network of stores, is “increasingly without purpose.”

Long term, HMV could well survive, but it’s likely to exist as a nub of stores for customers who still want to buy things in the physical realm. The retailer is managing the decline well and it may still have a role on the high street in 10 years, but it’s likely to be a far smaller operation than today’s.

“What they should have done at the outset is turn the proposition to be digital,” says Saunders. “But now it would be very difficult to disrupt the players in that space already.”

HMV’s performance continues to be as strong as it can be in a difficult context, but the fear is that it’s a business that’s increasingly incongruous in a changing world.