Photo Industries in Agony
Abstract / summary of the German analysis on the photo industries for my readers from abroad.
Your will find all details, diagrams, sources and elaborate proof for any thesis in the German text Foto-Wirtschaft.
This article is about the photo industry, the economic conditions of camera manufacturers, the crisis of the digital camera manufacturers, the decline in the photographic industry, the economy in photography, as well as general commercial aspects in modern photography.
- The photo industry is not suffering from a saturated market, but from a declining market: The market for digital cameras (and consequently also the accessories) will continue to shrink dramatically. The trough has neither been reached nor passed. - Currently my forecast for the period 2016-2020 is a further decline in sales by 75% on the basis of 2015.
- The number of people buying photo cameras (and equipment) will reduce to the so-called hard core of serious photographers again - similar to the days of analogue photography. And the usual conventional 2/3 of by-catch will be reduced drastically.
- Considering this rapidly diminishing camera market there are too many companies, with too many products to offer. Thus, numerous products as well as some companies will disappear from the market.
- No matter what brand and model you own, the consequences of this market shrinkage will be far-reaching for the customer: increase in the cost of new products, loss of value of existing cameras and even incompatibility.
- Many previous analyses were based on false foundations, sources and assumptions, were significantly too optimistic and went past the core problems of the photographic industry.
- Especially in Europe, the decline will make dealers' life hard in the years to come.
- Additional thesis September 2016: The photo industry has already initiated a development to turn away from classical photographers to new markets and target groups such as cars, surveillance, smart home, medicine etc.
- Additional thesis May 2017: The photo industry wants to counter the worldwide lack of demand by increasing the suppliers' side via overproduction - at least until the Olympic Games 2020 in Tokio - a short-term face-saving strategy.
- There has been a visible economic decline since 2010.
- What is worse, there has been a much longer decline in the interest in the field of photography: worldwide it reduced by half since 2011, in Germany it reduced by three quarters since 2004.
- The reasons for economic decline have to be blamed mostly on false assessments by the management of the camera producers and their incompetent analytics over the last decade.
- The counter measures taken were: relocation of production, drastic reduction of costs starting from R&D up to customer support, increased marketing spending, restructuring of the companies and their processes, price dumping and grey markets to place the overproduction, a glut of products, pseudo-innovative product cycles, or slow innovative cycles, disregard of whole sensor-sizes and software, focusing on full-format cameras and high quality, as well as the new target group women - impressive, but not effective. - On the contrary, the negative consequences annoyed customers and damaged the image of some companies.
- Neither the financial crisis of 2008 nor the smartphones triggered the crisis of all camera producers. The so far unrecognised causes are rooted in many other changes.
- After five consecutive years of decline, 2016 and 2017 will determine the future of the photo industry.
- It is a fairy tale that the wealthy clients will pay any price for cameras and that the drastic increase in customer prices will result in higher profits for the company.
- The battle of mirrorless cameras against DSLRs resembles the fight of the diesel locomotives against electric trains after World War II, while the majority of people had already opted for cars (i.e. smartphones).
- A weak Euro, strong US$ and even stronger Yen will hamper exports, especially to Europe for a long period. E.g. the new Canon 5D Mark II sells in Germany at 4,540 US$, whereas the MSRP is 3,499$ for the USA.
- Considering the high technical level already achieved, the costs in R&D for further improvements will increase dramatically.
- Manufacturers mostly ignore the demographic and social change in many societies, as elderly as well as young people want different cameras.
- Until now most managers disregard high follow-up costs for consumers when buying their new products: New camera --> new PC --> new software --> time consuming learning ...
- Most photographers own 3-5 cameras already, and the "last one" is really "good enough" for most of them.
- The camera market is not only saturated - it is shrinking:
- PC-specialists, who migrated to photography are leaving to Virtual Reality etc.
- Elderly ladies, who learned photography, have already migrated to smartphones.
- In the beginning, their husbands bought Bridge-cameras, but lately either switched to Micro-Four-Thirds or simply stopped taking photos.
- Professional photographers did suffer most from digital cameras, as thousands of unemployed people pushed into their business and ruined their income. In many countries a large percentage of those professionals can hardly afford to buy new cameras.
- Large proportions of people, that had come to photography, treated it as a means to an end (mostly documentation, communication, experimentation etc.). The minute they were offered an easier means to their end, they left again. Only the few enthusiast, who see photography as an end in itself, will stay. - And they are growing older every year.
- Incompetent analysts have been repeating false data and conclusions for almost a decade.
- With decreasing numbers of photographers and a large number of products the former positive effects of scale are now rapidly turning negative, making it almost impossible for the camera manufacturers to gain any profit.
- In the period from 2016 to 2020 the camera market will shrink down to a maximum of 25% of the numbers of 2015.
- And this optimistic view will (at least for Europe) only materialize, if the politicians can restore order and safety in the streets again.
- In September 2016 the president of the German Photoindustry stated quite clearly in an interview to the Photokina, where the future of the industry will be: Cars, Security / Surveilance, Smart Home, Medicine, Virtual Reality, Video, Imaging as an Event etc. - The classic photography, that we have known for the last two hundred years, is getting out of focus. - Thus, the photo indutries can and will do without the photographers.
- Neither business as usual nor fast shots from the hip are an acceptable solution to these challenges.
Possible scenarios after 2018
- Can the manufacturers simply sit it out? Samsung proved everyone wrong. They withdrew. From now on, everything will be possible: restructuring whole companies, outsourcing, drastic cost cutting, reducing the number of camera lines, closing sensor sizes / lines, stopping the production of accessories, shutting down factories, reducing support, withdrawing from Europe or Russia due to weak currencies, mergers and acquisitions, selling of departments, closing of branches, cooperation, standards, illegal trusts.
- The consequences for photographers: higher prices, less service, incompatibility.
- The consequences for the photo industry: overproduction, heavy losses - terminal stop: HiFi-industry, Camera manufacturers sliding into insignificance - with relevance for a small minority of enthusiasts only.
- The consequences for individual camera producers: Takeovers by China or hedge funds? As the economic situation turned really bad, the Bank of Japan has been buying large numbers of stock market shares of many companies - especially camera-producers - since the start of 2016, to protect them by control stock from foreign takeovers.
- The consequences for photo shops and camera resellers: While there might be rising profits for US dealers due to the strong US currency, most European dealers will suffer heavy losses and a large part will go out of business till 2020.
- As the bearer of bad news has always been executed or at least tarred and feathered, feel free to do so. But keep the facts in mind.
- I do not receive any money from any party whatsoever for writing and permanently updating this analysis.
- So, please, cite me correctly (my name is Dr. J. Schuhmacher), and put a link to me in your text.
- If you have any questions or need consultancy, please feel free to contact me.
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Foto+Design - Dr. Schuhmacher