WSJ: Fall of Film Sales Exceeds Forecast Done by Kodak

[Boyd Ostroff]

From today's Wall Street Journal: "US film sales appear to be withering faster than industry leader Eastman Kodak Co. expected as consumers turn to filmless digital cameras and picture-taking mobile phones." The story goes on to say "In January Kodak forecast a 10% to 12% industry-wide decline this year in unit volume of rolls and single-use cameras." The story cites a study by Information Resources Inc that shows "...in 2004 through May 16, IRI charted a 16% decline compared with same period a year earlier. And in the four weeks to that date, the drop was 19%." Fuji saw a 40% drop in YTD film-roll volume while Kodak dropped 22%. The story explains that the drop in overall dollars was smaller due to strong sales of disposable cameras.

Analysts had mixed reactions and Kodak said they weren't revising their original projection. Analyst Richard Stice is quoted as saying this could hurt Kodak's plans to increase sales in developing countries "Because of the prices in digital and because the growth in those economies is starting to pick up, people are skipping the conventional film and going straight to digital".

The Yankee group estimates that 6% of cellphones sold in the US last year had cameras, 19% are estimated for this year, but next year will see that number jump to 42%. This trend could hurt the sales prospects for disposable film cameras.

[Rob Belics]

It's interesting that while consumers are purchasing less film and spending more on digital, professionals are buying more film than ever before. Kodak's sales of professional motion picture film is up year over year and 11% so far this year.

[Jeff Donald]

I think we are looking at this issue from two different sides. I don't think anyone is going to argue that digital is not making many inroads in commercial motion picture production. However, digital is replacing film as the preferred medium for amateur picture production (both still and motion).

Consumer use of still film was a major revenue and profit source for Eastman Kodak. This is no longer the case given the rapidly growing digital market in the US. The WSJ article points to improved economic conditions overseas causing consumers to jump into digital quicker than Kodak predicted. The combination of these two factors has caused Kodak to lose revenue and profits faster than their predictions. No amount of commercial motion picture film use will offset the loss of consumer film sales.

[Ken Tanaka]

I understand that sales of large sheet films are also down. These are monochromatic films generally sold on rolls 24"-48"(?) wide that are used to produce the color plates for large signage, such as that found in stores and on busses. I wonder if a combination of digital signage and non-film printing processes are eating this away, too.

[Jeff Donald]

A huge portion of the signage is printed on wide format ink jet printers.

[Rob Belics]

I'm not saying anything about one market able to offset the other. I just find it interesting that professional MP sales are up 11% while the amateur market is down.

It has long been my contention that digital sales in the amateur market are driven by convenience but professional sales are driven by quality.

These numbers somewhat bear this out.

[Boyd Ostroff]

The thing that really jumped out of that article for me were the statistics on picture phones. 42% of new phones next year will have cameras. Wow, I had no idea this was such a major trend. Convenience is a big factor there. As one analyst pointed out, people who buy disposable cameras are not looking for quality. So if their phone can take a picture they won't buy a disposable film camera. I suspect this will also eat into the low end of digital cameras, and probably drive prices down further.

[Jeff Donald]

You may see some decent resolution chips in phones next year, as well. This certainly might intrude in the low-end P&S market. but I think your correct that the disposable market will really take a hit in the next few years.

[Rob Belics]

The only problem with upping the camera phone resolution is bandwidth. I don't know if that would even be possible right now.

[Jeff Donald]

I understand that 3MP camera/phones are about to go sale in Japan. The US is expected to see them around the beginning of next year. I would expect the resolution will be adjustable, so low resolution pictures can be emailed etc. and higher resolution images stored on the camera for downloading via bluetooth etc.

[Joe Carney]

I holding out for smellovision. Until then, it's just a picture.