When A Monopoly Isn’t Enough
This has nothing to do with the GFC, but all the same Eastman Kodak has just appointed a bankruptcy law firm.
Eastman Kodak says it has no intention of filing for bankruptcy. Shares of the money losing company are recovering Monday after plummeting 54% on Friday on news that it hired law firm Jones Day – known as bankruptcy and restructuring experts.
Whether or not they go under, Kodak is a long suffering American icon. The company has not made a profit since 2007 and revenues has dwindled for the last decade. In 2004, the company was removed from the Dow Jones Industrial Average after 74 years on the blue chip index. In 2010, it was removed from the S&P 500.
Kodak, the maker of photography film for well over a century, once enjoyed 80% market share for film. The firm first started its decline in the 1980’s when Japanese competitors like Fuji film took business with lower prices. In fact, as Peter Cohan writes in a recent Forbes column, stiff competition caused Kodak to lay off 19,900 workers in 1999. Another, 4,500 workers were let go in January 2009.
More than cheap film, the emergence of digital photography is what really killed Kodak’s business. Ironically, Kodak invented digital photography back in 1975. Unfortunately, for them, they have not been able to leverage the technology in a profitable way. Memory cards simply don’t offer the same kind of margins as film. Today, when people snap away on their smart-phones and post the pics to the Internet, there’s no money to be made for Kodak.
It’s interesting listening to the commentary in the accompanying video where they bury Eastman Kodak as being un-innovative and reluctant to change. The problem for Kodak is possibly that it got overly identified with its film product, and even when it went to the market with digital cameras, it had no branding power to fight camera companies that stole its thunder. All the same, all the Hollywood movies of the last 100 years were shot on one or another Eastman Kodak stock. Name a film and there’s a cinematographer who can tell you exactly which stock was used to shoot that movie. And all those great cinematographers are deathly loyal to film. They poo-poo shooting digital like it’s trying to create art with crayons instead of oil paints. The end of film is still a long way away in their minds.
So it’s a little surprising to see that somehow Kodak could not sustain itself outside of the film industry. Or perhaps it spent too much energy servicing the film industry and not enough in staying afloat in the consumer sphere. It’s not a company that isn’t iconic that’s getting lost in the fray – on the contrary, it’s the flagship firm of its industry where everybody knows the yellow corporate colour. It’s not company that is without a great deal of good will from its customers. Old school photographers and cinematographers alike delight in telling you how much they like film. Yet it is also surprising that a company that has a virtual monopoly on film with cinema can’t survive somehow. I guess that much of it is the sign of the times.
Oddly enough I still have some rolls of Kodak sitting in my room without a real reason to use them. I do so much digital photography I’d simply forgotten about those little rolls of 400 film. It would be weird if film disappeared from the supermarket shelves in the coming months.