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The State of the Imaging Industry



Radical Change Has Begun
by Kristy Holch, Group Director, InfoTrends Research Group, Inc.

What's in store for 2004, in the massive consumer photography segment? How far along are we, in the process of transitioning from analog to digital imaging?

We are in the early stages. The vast majority of consumers are still using film, but the impact of digital photography on the print market is being felt. Radical change has begun: analog imaging is flat to declining, whereas digital imaging, while small by comparison, is booming.

Here are some U.S. stats, gathered by InfoTrends Research Group, that illustrate this change. Digital camera penetration is approaching 30%. Around 10% of digital camera users don't print their photos at all. Over 90% of the remainder print at home, with less than a quarter having ever printed at retail or online. 17% of digital camera users are no longer using film at all, and only 45% expect to keep using film at least occasionally in the long term. Notably, digital camera unit sales and revenues now exceed analog, and home photo printing is booming. Leading online print services have become profitable.

In 2004, these trends will continue, with a few significant changes occurring in photo printing. Retail photofinishing will succeed in growing its digital camera print business significantly-though it will still remain small relative to its film business. Meanwhile, home print revenues will keep climbing, with compelling improvements in printers and consumables. Print longevity will become a more important selling point for consumers. Consumers will start to intermix home and non-home print locations, depending on which best fits their needs. Camera phone adoption will grow, but will not have much impact on photofinishing in 2004. Long range, it is still unclear whether digital cameras will result in more or less print revenue-there are convincing arguments for both, and InfoTrends will continue to look ahead for the answer.

Thus, the leading action item for the photo retail market in 2004 is to cultivate the digital print business, to offset declining analog sales.

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IPC
20/20 Vision
by James L. Chung, President, International Photographic Council (IPC)

20/20 is the perfect vision needed to look into the crystal ball of our industry now in a digital transition. The industry basically now enjoys profitless prosperity.

The latest data from IDC Research indicates that the U.S. accounted for 37% of the global consumer point-and-shoot digital camera shipments in 2002. 10.3 million units were shipped in 2002, a 57% increase over 2001 shipments. Shipment value grew 21% to $3.3 billion, representing 30% of total worldwide shipment value. 2003 shipments are expected to reach well over 13 million units.

  • According to a recent Nikkei Weekly, manufacturers are rushing to produce more digital cameras:
  • Sony has raised its projection for digital camera shipment for the year ending March 2004 by 20-25% to 10 million units.
  • Canon expects to boost production by 10-15% to 8.5 million units in 2003.
  • Olympus will raise its annual production forecast from 7 million units to 8 million units for 2003.
  • Nikon has raised its shipment goal to more than 5 million units from 4.6 million units.

It is expected that worldwide digital camera shipments will top 40 million in 2003.

According to Canon's recent market research of consumer behavior, digital camera users shoot up to five times more pictures than the analog photographers, but they print much less. The reason is that one of the beauties of digitizing snapshots is the ability to share them via email, website, CD-ROM, etc. However, prints and enlargements can bring more profits to retailers and manufacturers.

Japan is not only a nation of the rising Sun, it is a country of rising consumer imaging technology. Japan is the most advanced printing nation, and digital photographers tend not to print much because they share more through email, websites, etcetera.

According to a recent NPD Survey, digital photographers in the U.S. prefer to print their pictures at home with 90.3% of respondents in their market survey, which indicates a preference for home printing. Only 17.6% of respondents reported ordering prints at retail stores.

Joe Miller, vice president of Sales and Marketing for Spectra International, says soccer moms are one of the forces that will be driving digital substitution for the next few years. For soccer moms to embrace digital imaging, getting high quality prints is a must. The transition from silver halide to digital must be simple for her to have a rich experience and continue to take and share memories in prints.

Peter Fitzgerald, chairman of Digital Photo Works would agree that high quality prints are the basis for successful digital transition and profitability. Fitzgerald stated that the digital prints need to be better. The prints need to be photo quality-fantastic-produced by the photographic process. Also, digital prints need to be priced close to conventional photo prints.


   







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