Digital technology has taken a firm grip on the camera market. The digital camera market is worth about three times as much as the 35mm market and its growth is forcing traditional companies to consolidate as their wares become specialist, niche products.
This point was demonstrated by last week’s announcement that photography and printer companies Konica and Minolta plan to merge. The companies have struggled to keep up with the digital revolution and hope their combined expertise will allow them to remain competitive.
The market is being driven by consumer electronics companies such as Casio and Sony and computer companies such as Hewlett-Packard, although established camera companies such as Canon and Fuji have developed models. The new players have encouraged the whole sector to invest massively, making digital cameras more affordable and ensuring that picture quality is comparable to film. The fall in camera prices has been accompanied by a similar fall in the price of home computers, allowing consumers to manipulate and catalogue their snaps at home.
The digital camera market is now worth &£366m, and to November 2002 it saw year-on-year growth of 44.6 per cent (GfK Marketing Services). By contrast, sales of 35mm cameras fell 10.4 per cent by value – that market is now worth just &£127m.
Comet marketing manager for cameras and camcorders Oliver Doerle says that his company saw a 60 per cent increase in digital camera sales last year. He adds: “People are replacing their cameras now because they have become more affordable. Consumers used to replace their cameras every two to three years, but they will upgrade their digital cameras for innovative new functions. Retailers in the traditional camera market will not be doing well right now.”
GfK figures show that sales of still film fell by 1.7 per cent in the year to November 2002. Kodak admits that film sales and processing orders have been hit as consumers embrace digital technology, although it says the decrease has never exceeded five per cent in any one year since the launch of digital products. Kodak’s Advanced Photo System, which allows consumers to take pictures in panoramic, portrait or ordinary formats, has been hit hardest so far, with its market value dropping 28.5 per cent.
Fujifilm marketing manager for digital imaging Will Rolls contends that film is not dying – photography enthusiasts are still using it: “There is an idea that film gives you the edge. It has a strong foothold in the professional market. I think film will become like vinyl in the music industry: some people will always cherish it.”
Single-use and disposable cameras have also helped to bolster traditional film manufacturers. Fujifilm, Kodak and Konica are well established in the market. According to Mintel, the low cost, small size and widespread availability of these cameras have led to a massive growth in sales, with 11 million units sold in 2001. However, they face a challenge from camera phones and picture messaging, launched by the mobile phone networks last summer.
Camera phones are available from manufacturers such as Nokia, Sony Ericsson and NEC, and Hutchison 3G will soon launch the first mobile videophones. Camera phones are generally available from about &£300, but promotional packages from brands such as Vodafone Live have brought some prices down to about &£50.
The quality of images produced by camera phones is relatively low at the moment, and camera manufacturers do not yet feel threatened. There is agreement, however, that over the next three to four years phones will start challenging the single-use camera market.
Traditional manufacturers are putting a brave face on things. Olympus marketing manager Sara Cubitt says it will be a long time before digital cameras take over completely: “This is not the death of film. We are seeing the rise of two-camera families: they have both a digital camera and a 35mm, and use them for different situations. We feel it will be a long time before digital takes over. Both types can exist side by side.”
One challenge the digital sector has still to overcome is consumer ignorance. Doerle says that the marketing of digital cameras is currently focused on educating consumers about what cameras are available, and of what they are capable. The industry also needs to focus its marketing on the fact that consumers do not need a computer in order to view digital images. Few consumers realise that the memory cards which store the images can be developed just like a film.
The digital camera sector will no doubt continue to see dramatic growth, as it is still a very young market. Established brands such as Canon and Olympus are major players in the digital market but they are likely to come under increased pressure as consumer electronics companies carve out opportunities in this burgeoning market.