Newsletter

Industry Perspective

The Changing Face of Photography

By Ron Leach

As the photo industry continues to evolve, driven by ongoing developments in digital imaging products and services, we've seen some venerable camera companies fall by the wayside while new firms from the consumer electronics sector have moved in to fill the void. Of course, many well-established legacy members of the photo industry have modified their business models and product offerings and have become more successful than ever.

We recently received word of the diverging paths of two brands that have been integral to the history and development of photography Worldwide. Ever since Polaroid Corporation filed for bankruptcy protection in 2001 there have been rumors of the impending demise of their instant film. In 2002 Polaroid sold most of its assets to the private equity division of Bank One, who then sold Polaroid in 2005 to a holding company by the name of Petters Group worldwide.

For months there has been talk that Polaroid Corp. would soon discontinue its instant film, but no official confirmations. Now The Wall Street Journal has reported that Polaroid will shut its remaining U.S. film plants next month and will cease making film for its instant cameras by the end of this year. According to The Journal, Polariod is shopping its technology with the possibility that a sale that would result in the third-party manufacture of Polaroid film products. There have also been hopes raised and unsubstantiated rumors that Fujifilm would step in and continue making the instant film. So far, however, no official response from Fujifilm.

In addition to its two film plants in Massachusetts, Polaroid has facilities in Mexico and the Netherlands, both of which are expected to close later this year. The U.S. plants employ about 150 people.

Eastman Kodak Company, another brand synonymous with "film," is moving in a different direction according to reports that it anticipates accelerated profits and growth in the coming year. The company announced restructuring plans designed to leverage its expertise in both materials science and digital imaging technology.

Kodak has consolidated its silver-halide products within the newly created Film, Photofinishing and Entertainment Group (FPEG) to maximize ongoing results. This group now has responsibility for consumer, professional, entertainment and industrial films, as well as for graphics films, silver-halide photographic paper and chemistry, and retail and wholesale photofinishing products.

This year Kodak expects FPEG to deliver earnings from operations of 6--8 percent of revenue on a revenue decline of 12--14 percent. By comparison, the company is expecting revenues from its digital portfolio to grow by 7--10 percent, resulting in earnings from operations of 3--4 percent of revenue. On average, Kodak anticipates increasing total revenue by a compound annual growth rate of 5 percent per year from 2008 to 2011, with a compound annual growth rate of digital revenues of 10--12 percent per year during that period.