Spotlight: Photography

Photography consumption in India has been on the rise over the past two years. According to market studies, the Indian photography market had grown at a CAGR of approximately 12 percent over the past few years. According to market analysts, the growth rate could touch 15 percent before the end of this year. Traditional photography itself is expected to continue growing at the rate of over 8.3 percent. According to the same report, India consumes close to 90 million film rolls a year.

But the overall cost of photography has kept many users away from analogue cameras. Digital photography, on the other hand, comes with the promise of zero clicking costs. The Indian Digital Still Camera Market witnessed an explosive growth of 114 percent in unit terms during 2004. According to IDC, the Indian digital still camera market notched up revenues of Rs 366 crore during 2005.

Each year, camera manufacturers have been introducing increasingly sophisticated, high performance digital cameras at a fraction of the cost consumers had to pay even two years back. Three mega pixel digital cameras have now become the de facto standard. Most manufacturers have actually stopped production of anything below that specification. While in 2003 the models which sold most units were in the 2 mega-pixel range, 2004 witnessed a shift to the 3 mega-pixel range. Around 48.2 percent of cameras sold during 2004 were in the 3 mega-pixel range. Even in the area of processing, digital technology has been slowly replacing conventional processes. Entry of manufacturers like HP, BenQ, TVSE and Techcom in this market further accentuated the competitive landscape of the Indian digital still camera market.

Worldwide trends also point to an increasing movement towards adoption of digital cameras. The InfoTrends Research Group estimates that worldwide revenue from low-end digital camera sales will reach $11.8 billion by 2007. Shipments of these cameras will reach 24 million units in 2002, capturing 28 percent of total worldwide camera sales (not including one-time use cameras). Unit volume is forecast to grow at a compound annual growth rate of 16 percent to reach 51 million units in 2007. Says Charanjit Singh, Analyst, Peripherals Research Group, IDC India, “As prices dropped and quality issues got addressed, digital still cameras became a mass product. This is clearly visible from the fact that 90 percent of digital still cameras were sold in the consumer segment in the last year.”

PREVALENT MARKET CONDITIONS

This is one market segment that has an extremely strong growth potential. The reasons for this are manifold. Currently, photography consumption in India is less than half that of China and hardly constitutes more than a percent of the total consumption seen in Europe and the US.

However, there is a strong demand from India’s burgeoning middle class where there are currently more cars than cameras. Cameras are still not on the priority list for most buyers. It is still perceived as a lifestyle statement. But thanks to the awareness programs conducted by companies like Kodak, Canon, Samsung, etc, this perception is undergoing a gradual change.

Even the gargantuan growth witnessed in the phone camera space has played a key role in increasing the demand for cameras. Phone Cameras are expected to reach five million by end this year. And a rapid decline in price can only accelerate this growth rate in the coming years. Digital camera manufacturers are indirectly benefiting from this trend, as camera phones are slowly inculcating the photography culture among the masses. The relatively low resolution of phone cameras convinces many users to then opt for a relatively high-end digital camera.

The growth of the Internet has also led to an increase in the demand for digital cameras, as high speed broadband connections and unlimited online storage space has made sharing pictures that much easier. This has in turn led to an increase in demand for new and more innovative and cost effective methods of shooting and printing digital photos.

The ability to acquire, store, and distribute content over a media network has created new opportunities for PC resellers. The impact of devices such as Media Center PCs, Wi-Fi image capture devices, media servers, and portable media players on traditional viewing models will be nothing short of revolutionary. Not only will premium content from service providers need to be managed, but personal content from digital cameras and video camcorders will flow over these networks, creating a need for management of this content and an opportunity to monetize it for hardware and service providers.

MARKET OPPORTUNITIES

The Indian digital still camera market is flooded with manufacturers from different backgrounds. Gone are the days when cameras were sold only through the photography channel. Year 2004 saw the distribution channels for digital cameras being redefined with the coming-to-the-fore of the IT and Consumer Electronics channels. While vendors may choose to selectively focus only on the photography channel or the IT channel or the consumer electronics channel, bigger players like Kodak and Canon have a presence across all three channels. According to IDC estimates, the IT channel contributed to 30.5 percent of total sales during the second half of 2004. Though studies have still not been made available for the same period last year, market analysts estimate that there has been a significant rise in this figure.

Resellers can create opportunities by focusing solely on the photography market. A end-to-end solution provider can look at entering diverse product segments like photo printers, all-in-ones, photo editor software, memory card players, card readers, special lenses, media solutions (such as T-shirt transfers, photo paper), consumables (inks, toners) and of course the digital cameras itself.

Currently, a large number of digital camera owners are resorting to digital photo finishing labs to print the photos. This is one reason why companies like HP and Kodak have been setting up digital photo labs. However, consumers are increasingly looking at home solutions to meet their photo printing needs. Printer solution manufacturers have been introducing various innovative and technologically advanced solutions in this space. Today, there are printers available that can match photolab quality. Technological advancement in ink technology has made it possible for home consumers to print copies that can last eons. As per IDC estimates, the ratio of digital cameras to photo-printers during 2004 was 8:1. Increasing use of digital still cameras is expected to lead to higher levels of penetration of photo-printers in the home segment. At the same time, the digital still camera would get a further fillip once the availability and affordability of printing infrastructure is in place.

Memory Cards is another area, which resellers can tap. This product segment has played an important role in the development of the digital still camera market. Following the growth in the market, the SD/MMC card has emerged as the most popular storage medium.

Sooner rather than later digital photography will replace the traditional. The total cost of ownership and the ability to view recorded images immediately, online sharing capabilities and wireless accessibility will prove to be key drivers. Storage on the Net and wireless technology that facilitates transmission, storage, display, and printing of images will be key drivers. 

As PC penetration levels in the Indian market increase, this is expected to drive growth in the digital still camera segment too. The PC to digital camera ratio during 2004 was 24:1. Hence, there is still a long way to go for digital still cameras in terms of their penetration. However, India is a value conscious market. And affordability is a key factor. Hence, resellers need to focus on quality at an affordable price to penetrate the market.