Your Next Camera Might Be a Subscription: Here's Why

Your Next Camera Might Be a Subscription: Here's Why

Even before the economic disaster of COVID, the camera industry was contracting. The software industry has adopted SaaS pricing, with Adobe Creative Cloud being the most recognizable example. That pricing model, or one like it, might be the next big change coming to camera hardware.

This shift to a subscription pricing model could take a couple of different forms. For reference, consider the changes in the automotive industry. Car manufacturers are pushing beyond the traditional pricing models, exploring a true "car as a service" model, like Cadillac's Book service or Volvo's Care service. Additionally, Tesla has started gating both real-world features like additional range and software perks like Autopilot behind software paywalls.

For a camera manufacturer, you could see this play out in similar ways. As Nikon, Canon, or GoPro realize that many people don't need to own or use a camera every few days, they could create a rental service, acting as a streamlined, consumer-friendly rental house. For a more niche product like GoPro, this might make a lot of sense, as the end consumer doesn't need an action camera consistently, but would happily pay $50 to rent it for a week in Hawaii. Even major manufacturers might find it easier to make a couple of $100 rentals of an entry-level DSLR to users than a full $600 sale.

In fact, I'd argue you're already seeing the initial steps towards this model. Nikon's Z 50 launched with a trial promotion, where they would ship the user the camera, memory cards, and lenses for a 30-day in-home trial. It's only a short leap from the infrastructure to support that program to a full rental program.

Beyond trials and rentals of hardware, the camera's software is ripe for subscriptions and pay-gates. Essentially, they'd apply the in-app purchase model to your camera. For reference, Tesla does this with some software features, where the necessary hardware is installed in every car, but locked behind a purchase. As more and more of the camera's functionality is determined by software, it would be easy for camera companies to produce fewer models, then differentiate them by software.

This is another development that camera manufacturers are already practicing this concept, just in a less formalized manner. Consider the ability of DSLRs to shoot video: with a similar ASIC and sensor, some cameras can do "cinematic" 24 fps, while others are locked to 30 fps. The same goes for controls: most of the buttons on the camera just trigger software functions, so there should be no reason why they can't be reassigned from WB to ISO, for instance. Instead, you'll find that this functionality is typically restricted to the higher-end cameras.

Canon's recent paid firmware update might be one of the first major examples of this. The update is quite a niche, just impacting how the camera is used for stop motion, but might be a trial balloon to gauge user sentiment. Nikon also offered users the ability to update some aspects of their camera aftermarket, like the raw video output functionality in the Z 6 and Z 7, although this, too, required an actual service center visit.

Why Now?

Besides a push to stabilize revenues, there are other factors that might make this the appropriate time for manufacturers to adopt these measures. The first is a shift in how cameras are developed, built, and distributed. The second is a shift in the competitive landscape, and the third is a shift in how consumers feel about subscriptions and aftermarket costs in general.

When it comes to how cameras are developed, the next generations of mirrorless cameras are vastly less complex in mechanics compared to DSLRs. A large part of that simplification has been a result of moving more features into the software. Mirrorless cameras need fewer buttons if they have a touchscreen, for instance. Additionally, there's a much more marginal improvement between a current-generation 24 MP APS-C sensor and last year's 24 MP APS-C sensor, with the difference instead being a result of the processing pipeline. To understand how this relates to pricing, consider that a greater share of the bill of materials for a camera is now, or should be, going to software. The great part of software development is your costs are roughly the same whether you sell one copy or one million.

Besides shifting priorities in development, it's easier than ever for camera manufacturers to go direct to the consumer. By removing the dealer, manufacturers can cut out a substantial cost, as well as develop a closer relationship with their customer, in the hopes of promoting additional sales down the line. While they take on more costs in this case, including distribution and order processing, it might actually help their inventory issues, as there is less "whip" in their supply chain to the customer.

With the industry as a whole slowing or even shrinking, manufacturers would love to build consistent revenue streams. Whether that takes the form of a complete subscription or recurrent revenues from paid firmware upgrades and feature unlocks is yet to be determined. But I expect that for many brands, selling a camera every couple of years won't be enough to keep the lights on. There's going to be a limit to just how high they can push the average selling price of a camera can be pushed before people stop buying. When that time comes, they'll have to shift to a new model or at least bring elements of an alternate model into the mix.

What's This Mean for Us?

Right now, it's tough to say whether this will even be implemented before it's too late. Industry revenues are falling, and most camera makers are notoriously adverse to change. Furthermore, there will be some implementations that offer a ton of value to consumers, like a reasonable price for a paid firmware update that breathes new life into a camera, a la Fuji's Kaizen updates. Others, like just pushing the price point of "pro" features even higher or to protect their prolines in general, aren't going to help anyone.

I've said for a while now that developments in computational imagery will be the next big frontier in imaging; we already see that with stagnating pixel counts and FPS figures. Hopefully, the carrot of additional revenues will prompt manufacturers to follow Apple's path. Imagine getting a software update that could unlock the level of utility in Night Mode in your existing camera!

If I had to put a bet down, I'd wager that GoPro will be the first to move into this space. Tellingly, they went from having like seven different cameras available at once, down to about 3, depending on what you consider available. Consider a future where they make one or two models, like a Hero 9 and a Max 360, which you could rent for a certain period, along with the ability to upgrade your rental with features like 4K or Cine Log recording. It might be a much easier cost for the average consumer to swallow, compared to owning a $400 camera outright, particularly when it's of limited use. By keeping their inventory low, they could introduce new features on a rolling basis, all while improving their margins thanks to a reduced cost of customer acquisition.

What do you think? Would you be willing to explore a new model of camera ownership? 

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23 Comments

Ed C's picture

Huh huh ... right.

Troy Straub's picture

My next camera certainly won't be a rental. Even if all camera companies stopped selling gear tomorrow I would buy used when the time came. Plenty great stuff already out there. If i were someone who only needed a camera for a vacation I would most likely just use a phone. Probably get better results than trying to figure out a rental especially for someone who doesn't own a camera.

Alex Coleman's picture

No reason why the models aimed at this new rental market wouldn't be easy to use - arguably the GoPro is one of the easiest cameras to use on the market, given the ease of framing and lack of many control options.

For an existing photographer, it might take longer to roll over to this model, just like how some clung to CS6 and non-subscription Lightroom, but some aspects of this model are going to have to happen for the camera industry to keep making money. Your very mention of buying used exemplifies the difficulties they face in generating those sales.

Tony Northrup's picture

I think there are huge opportunities for camera manufacturers to sell services. The easiest would be to sell storage (something like a next-gen image.canon). Apps, of course. Or bundle the hardware with a cell plan like smartphones, where the consumer pays Verizon a monthly fee that covers the hardware and includes image uploads and smart storage (like Creative Cloud with syncing or Google Photos with AI subject detection).

It'll never happen. Camera companies just can't adapt. Not a single one of them. At least, that's what they've led me to believe up to this point.

Alex Coleman's picture

Camera companies do have to offer more flexibility in how you move your images around, but I disagree that it would stand to make them much money. Whether they're going with existing data storage providers or partnering with cell providers, they won't be owning the value-add, meaning they won't be making that much from the service. Canon's already rolling out that AI Lightroom culling tool, but that would be easy enough to duplicate with a plugin from another company. They need to focus on the camera experience - plenty of other companies are already miles ahead in the "after the shutter" aspect.

Jan Holler's picture

Why would the camera manufacturers share their revenues with phone or cloud companies? And why would they implement features that very well could be obsolete in a few years? And above that all: What would be the benefit for the photographer? Consumers use more and more their mobile phones which cover more or less all of what you claim. Pros do know themselves where to store and how to handle images. I really doubt they do want to transfer hundreds of RAW files of about 40-80MiB to a cloud.

Alex Coleman's picture

Agreed. I think some photographer's emphasis on inter-connectivity with stuff like phones and cellular is irrelevant for most purposes, until there's a paradigm shift in post processing. Files are too big, raw is too important.

Rhonald Rose's picture

I'd buy few gfx-100s and stay out of rental model.

Alex Coleman's picture

I'm sure Fuji would be just as happy with that outcome too.

Martin Bihounek's picture

nothing new there. haselblad has a rentalsystem for there bodys for years

Alex Coleman's picture

Professional level rentals are very different in spirit and implementation than what I'm proposing may happen. Hasselbald is like renting a backhoe for a specific, professional job, while the consumer model would be more like renting a car while on vacation. That's a messy metaphor, but it should convey some of the difference.

Kai Griesshammer's picture

I don't see a rental model for myself but I would like to have the choice between different functions that I could add to a basic model. Take the upcoming Canon EOS R5. I take pictures and am less interested in the video functions. I would buy the basic model and choose a Fuji-style film simulation instead of the 8K video function. And because I value image quality, I leave out the ISO xx000 and add the ISO 50. That would be interesting for me.

Alex Coleman's picture

That'd be interesting to see. I'd even like the ability to just customize controls to a greater extent. I've never shot video with my Z7, so there's like 3 or 4 hardware buttons that could be entirely changed to better suit how I use it. Same goes for the menus. Being able to hide or rearrange the options could make it more efficient.

Dave Bentley's picture

It's an interesting thought. I could def see it being used by something like GoPro. I also see an opportunity for camera companies to target specific audiences...such as "influencers" and something like a New Every 2 program on lower tier cameras

Andrew Morse's picture

The licensing model makes sense for software and maybe even software upgrades to a camera, but I can't see the full purchase of cameras moving exclusively to a licensing model. It would completely alienate the retailer (where most cameras are purchased), it destroys the resale market (which may change the new camera purchasing behaviour for some), the manufacturer then accepts some of the risk of damage or loss of the device (making it their problem when someone's camera goes for a swim instead of the photographer), and it will take more labour and cash to enforce returns if people stop paying their fee. None of that is hard for software developers since they can require an internet connection to use their tools and remotely shut systems off or allow re-downloading if the software is damaged or accidentally deleted, but doing that with a camera is a much harder and shipping/labour intensive task. I'm not sure it would be financially preferable to do it that way for the manufacturer.

I could see an optional upgrade program as being much more likely alongside a full purchase program. Look at how apple did it with the iPhone - you can pay a monthly fee to have a constant upgrade stream with apple care, or you can still work through your carrier or buy a device outright.

Alex Coleman's picture

There's already a number of precedents for renting expensive physical products - just consider rental cars. The upside to the manufacturer is cutting out the retailer's profit margin and being able to generate more cashflows as a result of a broader market.

I agree that this wouldn't fully supplant the existing sales models, but it certainly seems like a desirable addition to their sales model.

Andrew Morse's picture

There are certainly precedents for rental, I mean even camera equipment gets rented right now of course, but transitioning to a near entirely rental/subscription model does not seem realistic. Renting a car for long term is pretty different than renting a camera for the entirety of ownership. If someone leases a car and then chooses not to return it or attempt theft of the car, the dealership is very incentivized to chase the person responsible, and the cost of chasing that person is proportionately low compared to the value of the car. For a GoPro it may cost a lot more to go after the offender than the value of the camera and it is a lot of work and time. Maybe for five-figure+ camera bodies it could make sense, but for camera bodies below that mark I'd struggle to see it.

Cutting out the retailer is a challenge as well. If the retailer isn't getting a cut of the sale value of those products, why would they carry them? If the retailer doesn't carry it, then the manufacturer now has to effectively become a retailer and establish their own distribution system to manage it. Overhauling a distribution system is a massive task filled with risk. The first manufacturer that goes down that path will see all of their camera bodies removed from store shelves and online retailers, allowing a considerable opportunity for their competitors.

Also, this would arguably make it easier for people to switch camera manufacturers, which I think is the opposite of what manufacturers want. As an example, if I'm subscribed to Canon and I dislike their new announcement, I can cancel my subscription and pick up a Sony or Nikon subscription with no financial penalty. Right now manufacturers greatly benefit from people accumulating equipment in an ecosystem which encourages them to stick with the manufacturer. That would all be at risk in a rental/lease environment.

The subscription model works for Adobe because if you've accumulated a ton of adobe files over a career, you're going to need to use their software to keep accessing a lot of those files, and there aren't really any competitors with a complete list of comparable products. Right now I use Photoshop, Indesign, Premier Pro, and Illustrator pretty regularly - if I moved off of Adobe I'd need to find replacements for all of those and a way to keep opening each file type. It's possible to switch to new products, but it would be a pain. In a rental environment if I switch my camera and lenses to a new brand I can still access and open all my old images without any trouble right away, and the only barrier to switching to a competing brand would be learning the new camera system.

I don't know - I just don't see that model working for camera manufacturers without answers to some big questions. Sorry for the rant - that got longer than I wanted!

Sidney M's picture

It's mine. Not yours. Mine. All mine. Do you hear ?
No rentals for me !

Btw could someone just run over ISO with me one more time. :D

Darren Whitley's picture

With cellphones in consumer pockets, this is highly unlikely. The market has moved away from owning a camera. Only discriminating people with disposable income would be inclined to do this. But the inconvenience factor is too great to overcome this.

The future for cameras is going to revolve around integration of an Android UI and moving away from DOS-based menu systems. Even video cameras will have to be move this direction. Currently, great cameras exist with terrible camera controls. The consequence of having a terrible UI will be the next chapter as we move towards smart phone controlled cameras or cameras with a built-in GUI.

Alex Coleman's picture

Does Android/iOS stand to add much to the experience? I've already written about how I feel many camera apps themselves don't create value, much less adding an entire OS on. For the higher end of cameras, which I believe would be all that's left under your proposed scenario (where phones have asserted absolute dominance), physical controls are always going to remain king. Supplementing with a touchscreen is nice, but no glossy menus will be able to supplant that.

Jeff Drew's picture

Rent, lease, own-via-mortgage, it’s what many have done for decades because of the high MSRP on brilliant equipment, or a home. Subscriptions are the hook that keeps us indentured, but it hurts soooo good!

Andrew Johnson's picture

The reason I don't see this happening is because of the potential for third-party vendors hacking the software and selling upgrades to cameras for a lower rate which would completely dismantle that selling method for the camera companies. You see this occurring in gaming all the time.

C V's picture

Don't intend to rent a camera
That is something that I intend to own
Nope
No way
Not ever
interesting concept though