Digital Cameras Change Focus of Photo Industry

Bruno Cos, who owns the 45-year-old business Photozip in Westport, Conn., has seen lots of changes in the photo industry throughout his career.

Notably, when big retailers started offering film processing at a discount in the mid-'90s, some of his business took a hit. Then the terrorist attacks of Sept. 11, 2001, changed the vacation habits of his customers, who previously traveled -- and took lots of pictures that needed developing -- about five times a year.

But nothing was quite as drastic as the popularity of digital photography. "We got hit basically as soon as digital came out," Cos said. Though his existing equipment was less than two years old, he opted to replace it with digital machinery to offer new services.

"People now want instant satisfaction," he said. "They want to come in and leave with pictures."

With new equipment costing about $150,000, many other small business owners faced with similar choices opt to close rather than make such a big investment, said Dimitrios Delis, director of marketing research with the trade group Photo Marketing Association International.

"For the mom-and-pop store, that was a big decision they had to make, and many decided to close down and forget about it," he said.

According to a report by PMAI, 2,400 specialty "mini-labs" closed between 1999 and 2003, and many other facets of the photography industry have been altered as well. In 2004, retailers handled 32 percent of the prints made from digital cameras, up from 16 percent the year before, according to a PMAI report. The group projects that in 2005 the figure will rise to 39 percent, though the majority of prints are still made at home.

A Changing Industry

Photo labs used to have a few main business categories -- film processing, selling cameras and accessories, and selling consumables such as film, Delios said. Processing typically comprised 40 percent to 50 percent of their sales, he said, but digital cameras have drastically cut the demand.

Combined with increased competition from large retailers like Wal-Mart and Walgreens, the advent of digital cameras and their continued improving quality and falling prices have posed a new challenge. Digital camera sales grew 40 percent in 2004 to 18.2 million units, the PMAI report found. For 2005, that number is expected to grow to 20.5 million, accounting for 82 percent of all camera sales, up from 73 percent in 2004.

At the same time, the overall film market declined by 19 percent in 2004 to 656 million units and is expected to fall to 532 million in 2005, according to the report.

Digital technology has changed the work of professional photographers as well. Scott Ashton, a freelance photographer based in Los Angeles, switched to digital when clients began asking for the format.

He's found that it helps because art directors and other clients can instantly see his work online, eliminating delays. "I don't need labs anymore," he said, adding that those who hire him can choose borders or other special effects for their images online.

Ashton said he now has greater control over his photos, enabling him to edit the ones he doesn't like, enhance proofs and offer minimal retouching as a service for less than a lab would charge.

For the labs that deal with professional photographers, a change of focus was needed to compete. Don Weinstein, who has been president and owner of Photo Impact in Hollywood for 25 years, said his business has evolved from what was once simply a high-end custom black-and-white photo lab to more of a full-service business.

He hopes it now will "bridge the gap" between photographers who are still more comfortable using film and clients who are becoming accustomed to the accessibility of digital images. The lab develops film and creates high-resolution scans of the images so that photographers can continue to use film but can provide their clients with digital images.

"You don't need to shoot digital because you're ending up with digital. You have the film to keep for archive," Weinstein said. "Now they're shooting something they're familiar with, they know what the result is and they've got film that's archival."

A New Landscape

As the quality of digital cameras continues to improve and prices continue to fall, the demand for digital services is sure to increase. At the same time, analog photography use is falling. The total value of film processing in America is projected by PMAI to be $3.7 billion in 2005 compared to $4.6 billion in 2004 and $5.3 billion in 2003

"What's driving all this for [change] a pro lab is the end user," Weinstein said. "It's not the photographer going to the client saying, 'I want to shoot digital.' It's the clients saying they want to shoot digital. They don't want to pay for film processing, they want to look at it on the Web."

While much of his work is commercial, Ashton said people who hire him to photograph their weddings or take portraits have become comfortable with the digital format. "Families still love to have pictures in their hands," he said, "but it's becoming a lost thing now."

Indeed, according to PMAI, the number of images that never were printed and stayed in digital format -- 9.4 billion in 2004 -- is projected to grow to 12.3 billion in 2005.

That's part of what has affected Cos' sales. "People take pictures, leave them on the memory card, come in and only print one or two," he said. "The biggest impact is that people really don't go and develop all the pictures they take."

And while film quality still is "much better than with digital," he said, digital is catching up, and he predicts it won't be long before businesses like his forgo film altogether.

"Anybody that doesn't go that way is going to suffer," he said.

Delis agreed. "The new technology is presenting as many opportunities as it did present challenges," he said.