For the past five years, Swiss photographer Catherine Leutenegger has been documenting Kodak's decline, and "life slowly draining out of the head office in Rochester, New York". Image © Catherine Leutenegger - www.cleutenegger.com.
The past 12 months have proved to be a paradigm shift for the photography industry, with legacy companies faltering while technology start-ups strive. And Kodak is, without doubt, the one company that proved times are changing.
In January, the 123-year-old Big Yellow filed for bankruptcy protection in the US. The decision came after six years of losses that had resulted in Kodak amassing $6.8bn in debt, while its assets were valued at only $5.1bn. The Rochester-based firm had hoped to clean up its finances by selling more than 1100 photographic patents for more than $1bn, but that proved optimistic.
Since then, Kodak has worked to re-emerge as a "lean, world-class, digital imaging and materials science company, to maximise value for stakeholders, including our employees, retirees, creditors and pension trustees," says its CEO, Antonio Perez.
As part of this restructuring, it first announced back in February that it would kill its digital camera and picture frame businesses in a bid to improve margins. At the time, Kodak was committed to its film division, reaffirming its support to photographers: "Kodak's continuing consumer products and services will include the traditional film capture and photographic paper business, which continues to provide high-quality and innovative products and solutions to consumers, photographers, retailers, photofinishers and professional labs."
The respite was brief, however. In March, Kodak hiked the prices on all its consumer and professional films by 15 percent to offset increases in energy and raw material costs. The company also discontinued three colour-reversal films, putting an end to 77 years of heritage. And five months later, Kodak announced it would sell its film and paper divisions outright. "The initiation of a process to sell the Personalised Imaging and Document Imaging businesses is an important step in our company's reorganisation to focus our business on the commercial markets and enable Kodak to accelerate its momentum toward emergence," said Perez in a stern statement. "In addition, we continue our initiatives to reduce our cost structure and streamline our operating models in an effort to return the company to profitability."
In August, the plan was for Kodak to re-emerge as a printing company, with Perez claiming it had the "broadest portfolio solutions and enterprise services. These businesses have substantial long-term growth prospects worldwide and are core to the future of Kodak. We are confident our competitive advantages in materials science and deposition technologies, as well as our know-how in digital imaging, will enable us to capitalise on those opportunities and extend our leadership in key growth markets." But, just one month later, Kodak announced it would also exit the consumer inkjet printing business, concentrating instead on "commercial, packaging and functional printing solutions and enterprise services".
Now, Kodak continues to fight for survival. Last month it received a respite when three lending consortia accepted to provide $793m in liquidity. The loan will enable Kodak to "accelerate its momentum" as it continues to execute on its reorganisation objectives and emerge in the first half of 2013. However, the loan comes with new conditions, such as the "successful completion of the sale of Kodak's digital imaging patent portfolio for no less than $500m". Kodak says it is confident it will achieve this sale, despite months of unsuccessful negotiations with prospective buyers.
According to BJP's technology contributor, Jonathan Eastland, Kodak's decisions over the past year have created uncertainty among film photographers and could push them towards digital photography. "In the short term, this latest snippet in Kodak's sorry ongoing saga to regroup and rebuild will push many more photographers still dabbling with film but teetering on the edge of the digital divide over the cliff. They'll simply give in to the inevitable, faced as they surely will be with ever-increasing costs-per-silver-frame and further contracting lab infrastructure."
Digital continues to strive, thanks not just to legacy companies such as Canon, Nikon and Sony, but also to electronic companies with Apple and Samsung taking the lion's share. The iPhone, for example, has become one of the most-used cameras in the world, with sites such as Flickr, a photo-sharing service, reporting that the phone tops all other compact and digital SLR cameras.
The connected cameraphones have led to the emergence of new photography players such as Hipstamatic and Instagram. The former has more than five million users, helping establish a new "filtered" look in photography that has been adopted not only in the amateur and consumer realms, but also in the professional arena. But it's Instagram that has further democratised photo-sharing by attracting more than 100 million users in just over a year of operations.
Instagram's creators, Kevin Systrom and Michel Krieger, had just one goal when they created the phone application: to make mobile phone photography fast, simple and beautiful [BJP #7806]. And it's been a success with brands such as National Geographic and The New Yorker, among many others, adopting Instagram in their photographic workflows. And Facebook took notice, securing the company for more than $700m earlier this year.
Yet for Dan Heller, a photography analyst, Instagram doesn't pose a risk for more traditional photography companies such as Getty Images. "There are companies that do things with photography and get high valuations, but that doesn't mean they compete in the same sector," he says.
Heller was a consultant on another of 2012's big deals. In August, The Carlyle Group announced it was acquiring Getty Images from Hellman & Friedman for $3.3bn. The transaction saw the private equity and investment company partner with Getty's management to take control of the business, which is the world's biggest stock agency.
Getty's CEO, Jonathan Klein, explained that the deal would allow the company to expand internationally. "We're going to be investing more in Asia-Pacific, the Middle East and Latin America," he said last August. "Many people in the UK think Getty is an archive. In other countries, people think Getty just does editorial, or just sports, or stock photography. In fact, we're the largest global platform for imagery, full stop. So we'll be doing more of that."
Klein added that the deal didn't mean Getty had lost its soul. "I would say we have a deeper, richer culture than we've had in the past. We're still totally committed to imagery. We're committed to innovation. We have been responsible for almost all innovations in this industry in the past 20 years. Yet we're still pretty much the same team. The team that runs the company – the 12 most senior people in the company – all of them, except the CFO, have been with the company for at least 10 years. It's very much all the same team. It's harder when you get bigger, there's no question about that, but we've worked really hard to try to keep that intimate feel, not to have too many layers, and to have close relationships with image partners, clients and photographers."
For Heller, who was asked to provide an independent valuation of Getty's assets and revenues, the deal won't change anything. "There is a variety of layers in deals such as this one, but it's mostly inconsequential," he says. "Nothing is going to change. The company's policies and procedures are not going to change. It's just a transfer from one set of owners to another."
Heller believes the deal happened because The Carlyle Group saw Getty as a profitable company that would provide a healthy return on investment without inappropriate risks. "The company is perceived as being the provider of a stable income stream. It's not under threat of being hurt by the bad economy as people will continue to buy images. The company is very safe as long as it doesn't do anything differently." The risk, though, is if Getty decides to enter new markets ("but that's something we don't know about at the moment", says Heller) or if another company decides to enter the stock imagery business. "That would have to be an entertainment group – a company that is in the consumer market where Getty isn't. Yahoo could get in this market, but it chose not to."
Whether or not Getty is safe from non-traditional photographic companies, 2012 has shown new players making their mark. The year will be remembered for Instagram's meteoric rise to fame and Kodak's fall from grace.
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