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This topic comprises 4 pages: 1 2 3 4
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Author
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Topic: Kodak to get out of the FILM business?
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Steve Guttag
We forgot the crackers Gromit!!!
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Posts: 12814
From: Annapolis, MD
Registered: Dec 1999
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posted 02-09-2007 08:18 AM
Well it was bound to happen sooner or later. I've felt that Kodak's more recent ways of handling the film business makes them look like they are in the plywood and nails business. This article below does not sway my feelings any. Rather that clutivating a niche market for their film products and sizing the film divisions appropriately. They instead choose to slam the door on their 100-years of invoation and leadership in FILM.
Here is the article.
quote: Kodak may pull down the shutters on film business James Doran in New York
Kodak is considering hiving off its traditional photographic film arm and selling or spinning off the business it created more than a century ago.
The business, which has long been in decline, could raise as much as $1.5 billion (£664 million), according to Wall Street analysts.
Antonio Perez, the chief executive of Kodak, who came in three years ago to turn around the ailing company, believes that the traditional film business has just a decade of growth ahead of it.
To get out of traditional film would be a watershed for Kodak, the company that invented the consumer camera and pioneered the modern film industry. The business has been in decline for years as the photographic industries have been overtaken by the digital revolution.
Mr Perez told The Timesthat the Hollywood movie industry is the last big film customer in the world, but that digitisation is gathering pace.
“Digital film is in its infancy in Hollywood, but in maybe three years we will see much more of it,” Mr Perez said, adding that he expected Hollywood to have almost completed the switch to digital within ten years.
He declined to comment about a possible sale or spin-off of the film business, but a source close to the company said that the idea had been discussed by Kodak board members and senior executives and was well within the realms of possibility.
“We will do whatever is good for this company and whatever is good for shareholders,” Mr Perez said.
Analysts welcomed the talk of a potential sale of Kodak’s film business, as it would enable the company to devote much-needed resources to its burgeoning print and digital arms, which lag behind the industry leaders.
Most analysts believe, however, that Kodak’s film business will not command a high price because its fortunes are clearly declining in America and Europe. Sales of traditional camera film have many more years of growth remaining in Asia and parts of the Third World, however, where digital technology has not yet gained a strong foothold.
Asian movie centres, such as Bollywood, are also expected to use film longer than the Hollywood industry.
Even so, most analysts believe that the business would command a price only equal to about 0.5 times annual sales.
Sam Doctor, a JPMorgan analyst who covers Kodak, estimates that the company’s traditional film business will make sales of about $3.4 billion in 2007, declining to about $2.7 billion in 2008.
He said that the Kodak arm also owns a large amount of valuable real estate that could inflate its value.
Call me a Luddite, but it's just magic Graham Wood: Analysis
For all of my 35 years as a photographer, I have always used film. Partly it’s because I am a Luddite, partly because film is just magic.
It is a much richer medium in which to work, even though digital has come on in leaps and bounds in terms of quality. Now, with a photograph reproduced in a newspaper, you wouldn’t be able to tell the difference between the two media.
My problem with digital is the way it encourages photographers to work. Because you can see the end result instantly on the back of your camera, it takes your mind off the creative process of taking a photograph.
Another issue is that film is honest; digital photos are easily manipulated.
Of course, the huge advantage of digital is speed, but, if you have time, as I do on a weekly magazine, then there is all the time in the world to make adjustments.
Film has a lasting endurance. It is the true medium for photographers. Do you think Ansell Adams would have used digital?
— Graham Wood is the director of photography for The Times Magazine
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Brian Guckian
Jedi Master Film Handler
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Posts: 594
From: Dublin, Ireland
Registered: Apr 2003
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posted 02-09-2007 03:47 PM
Film is the heart and soul of Kodak, so selling its soul as it were, may not actually deliver shareholder value.
So what if Kodak becomes another inkjet printing and digital imaging specialist? There are multitudes of companies doing that already. What will differentiate Kodak in those markets, except perhaps price? But even that may not be sufficient.
Other companies have done this kind of thing in the past, only to see their fortunes plummet. If they go down this route, there will be nothing stopping a takeover by another printing / imaging concern and then the company could disappear forever.
I agree with Steve Guttag above when he talks about cultivating a niche product. What has to happen is the re-positioning of film as a high-quality, valuable product, rather like expensive artists' materials (there's a sense of that in the piece by The Times Magazine's director of photography).
One of the successful tactics used by some from outside the cinema industry in promoting digital acquisition and exhibition, is to falsely position film as "old school" and "obsolete". But that is just wrong. For example, oil painting has its roots in the Middle Ages, if not before. But Oils are still used today. Film looks positively youthful in that context, and its chemistry and make-up are up-to-the-minute.
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Steve Guttag
We forgot the crackers Gromit!!!
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Posts: 12814
From: Annapolis, MD
Registered: Dec 1999
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posted 02-09-2007 06:02 PM
Carmike's 2400 screens (or so) while significant is not a major switch to digital yet. It represents about 6.5%. Once they are done, they are done and there are no major influxes on the horizon yet for DCinema...Regal Cinemedia is going to experiment with it and if THEY make the switch...that is 14,000 screens for their group with Regal, AMC and others...that is the one to watch.
Furthermore, I still don't see the business sense from other than the distributor for digital...the equipment costs more to buy and obsoletes many times faster.
I think Kodak throws in the towel on their technology completely when instead they can cultivate niche markets and merely downsize the division appropriately. It is one thing to respond to changing market conditiions and it is another to throw any market you may have away.
In my opinion...if Kodak ceases film manufacture, Kodak as a company will not be around 2-decades after it stops. It isn't that Kodak is not inovative in other fronts but it is only a player at that point. Kodak should do some really long range studies as to where film can survive in the future and then continue down that path(s) for what is left of the film division(s) in addition to its other areas of excellence. I don't think it is an all or nothing situation...however I do think it is a necessary but not sufficient situation.
What Kodak should still do is promote its best format for cinemas...70mm IMAX is way too small a market. It should invest some of its million dollar investments in getting 65mm photography back into production and also into release prints. It is film at its best. If the powers that be think that film is going to go bust in 10-years....I doubt any R&D into new film processes/stocks...etc will change that enough to be worth the investment. Then again, changing the playing field by extending film's usefullness in cinemas will make future R&D worthwhile.
From what I can tell, exhibitors only seem to be getting DCinema equipment when it is practically given to them. It is hard to compete with free (or near free)...but when one has to foot the bill, it is another story. Film is still financially viable...DCinema really isn't...it doesn't generate the extra revenue to offset its significant extra expense (to somebody).
I'm a little curious...if AIX goes bust...what happens to the Carmike theatres that converted? [ 02-09-2007, 07:10 PM: Message edited by: Steve Guttag ]
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Leo Enticknap
Film God
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Posts: 7474
From: Loma Linda, CA
Registered: Jul 2000
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posted 02-10-2007 03:58 AM
quote: Steve Guttag From what I can tell, exhibitors only seem to be getting DCinema equipment when it is practically given to them.
That was precisely the business model which drove the conversion to sound in the late '20s (about the nearest comparison we've got to this cycle of technological change, IMHO). The mass conversion started by the vertically integrated studios (Warners, then Fox, then the others) cross-subsidising the kitting up of their theatres with proprietary technology (Vitaphone, Movietone and Photophone) from other revenue streams. A market in cheaper, generic solutions for the independent houses (e.g. the De Forest pirate system, Powers Cinephone etc.) then followed in the wake of this process.
OK, we don't have the same structure of vertical integration in the industry now, but from what I can see the money is starting to move around it to enable the mass rollout of digital projection in similar ways. The entire conversion process took around 6-7 years (in the US and Europe) from the tipping point in the autumn of 1926: interesting to compare that with Perez's prediction that film will remain a viable growth market for about 10 from now.
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