The film era was a cash cow, with cameras being high-precision instruments from specialist manufacturers and because they used film that needed developing and printing, a huge service sector that surrounded it. From the 1960s onward, the sector innovated and grew at breakneck speed. And then, it fell apart. Is that about to happen for digital?
There is some despondency over the fortunes of camera manufacturers, and that is understandable — the 2000s were a golden age of production, with over 120 million cameras shipping in 2010 (below). That figure dropped to a rather dismal 9 million units last year. The numbers speak for themselves, and the winner is undoubtedly the smartphone.
However, the picture is a little more nuanced, as the vast proportion of those 120 million were made up of low-value compact cameras, hardly the doyen of the sector. DSLRs and later MILCs are where innovation, value, and profit are to be found. Even at their peak, ILCs shipped some 20 million units (below), although this is now down to a more sobering 6 million but still shows some strength in the market and undoubtedly fierce competition as the moderate pool of manufacturers chase a decreasing number of consumers.
The Film Era
That said, the "digital despondency" of today is predicated on the the success of film in the 20th century, so marrying up CIPA shipment data from that era is instructive in understanding where we are now. The graph below shows a similar boom in film camera shipments that we have seen in the digital era. This was initially for focal plane shutter cameras (aka high end), subsequently followed by a peak in "shutter" (consumer-oriented) cameras. Perhaps surprisingly, the pro market (excluding the low-level trickle of medium format) peaked around 1980 at around 7.5 million units; however, the truly remarkable achievement was the 230B¥ in value this generated (not adjusted for inflation). The sales of units gradually rose, but their value spiked during an intense period of innovation, in part a result of the continued rise of Japanese manufacturers and the integration of electrical components into cameras. It is also likely a period during which there was an increasing number of consumers, greater wealth in the consumer market, and a general rise in prices. In short, there were increasing numbers of higher-value units, which is very similar to what we are seeing with mirrorless sales currently.
The 1980s was when the consumer market really took off, eventually peaking at over 32 million units and nearly 280B¥, enjoying 20 years of financial success for camera and film manufacturers. It's no surprise that Kodak and Fuji were hugely successful during this period. However, the speed of collapse was rapid, going into freefall from 1998 to virtually nothing by 2006. Of course, the reason for the sudden demise of a whole industry was the digital camera, except this time, shipments blew past 3 million in a matter of four years, eventually peaking at 120 million. Of course, the digital camera had been around a lot longer than the 1999 date that CIPA records start at, with the Fuji DS-1P ushering in the era as the first fully digital camera. Kodak was notable for leading the charge in developing the DSLR, working with both Nikon and Canon; however, it was Nikon that beat everyone to the punch with the D1 in 1999. That hides the fact that most camera manufacturers were successfully making compact and bridge cameras throughout the 1990s, which is what the success of the 2000s was built upon.
What Will the Future Hold?
What is fascinating looking at the demise of the digital camera is that it mimics the collapse of film camera sales. Back in 1998, the rug was literally pulled from under the feet of the film camera market, along with film manufacturing, developing, and printing. For an industry that had been around for about 100 years, the end was quick. The digital camera replaced it, and while there were some new manufacturers, many updated their product lines to reflect consumer demand, except this time, the market was bigger. Much bigger. By 2008, shipment value was at nearly 2,200B¥, nearly 1 times larger than the film camera peak of 1998. Although camera manufacturers enjoyed boom times, the replacement for the standalone digital camera had already arrived in the form of the smartphone. Camera shipments again imploded with ILCs now at the same level as the pre-1980s.
The driver for these dramatic changes in the photographic industry resulted from the success of photography and democratization of the image. It was only by the 1980s that the camera was cheap and simple enough for anyone to own, with the scale of developing and printing making costs relatively low. Digital cameras have simply continued that trend by making images easier to capture and distribute, and the underlying reason has been technical innovation. The digital camera has perhaps inevitably been the successor to the film camera. Innovation has also been key in the miniaturization and integration of cameras into smartphones. The consumers who bought film cameras in the 1980s and digital cameras in the 2000s are now buying smartphones.
Perhaps the burning question is: what is the next "big thing" for camera manufacturers? There is no obvious replacement technology waiting in the wings to take over from the digital camera, so what are the options for manufacturers? Firstly, there will always be demand for professional and semi-professional cameras; it will just be much smaller than in the past, with sub-5 million units annually seeming likely. Secondly, no volume manufacturer solely makes cameras, perhaps with the exception now of Olympus, and are diversified across other markets. Panasonic, Fuji, Ricoh, and Sony are all large corporations with vested interests elsewhere, with Canon similar, although more focused on the imaging and printing sectors. Nikon's greater reliance on imaging has made it vulnerable, but it too is broadening the scope of its divisions. Thirdly, film is profitable. Profits in Fuji's imaging division are driven by their Instax film business, with Canon and Polaroid enjoying revival in this area. Fourthly, it's worth remembering that cameras are in smartphones, something that camera manufacturers have seemingly been able to exploit to their advantage. We are seeing further collaborations between smartphone and camera manufacturers; however, greater R&D into the camera miniaturization, computational photography, and operating system/firmware integration are still in their early stages.
How can manufactures leverage their expertise going forward?