2. Forward
• Transformation and Recession continue to be the twin evils that challenge
the retail photo business.
– Transformation is too slow and uninspired
– Recession is too deep and preoccupying
• The combination of evolving consumer behaviors (smaller share of digital
images printed), an ever-lower “floor” for film print demand, and per print
price pressure keep pushing down the available retailer revenue from
conventional prints.
• Personalized photo output remains a potential bright spot with much
untapped potential to produce new streams of daily demand, higher annual
photo output market basket per household and much needed margin
contribution. However, loads of barriers remain until the promise becomes a
reality worth investing in. Who will lead?
• Share continues to aggregate among the top tier of retailers (really only 4
now) who control 75%+/- of U.S. retail prints. That could get worse.
• Kodak is “on the ropes.” Fuji is managing the segment like a twilight
business. Noritsu continues to have marginal influence on the “big picture.”
Xerox barely dabbles. Epson nibbles at the edges. Hp appears to be the
only major manufacturing partner who is investing strategically in the future
of retail output. 2
Retail Photo Output Projections Update – May 2009 PAGE 2
3. Market Opportunity – Conventional Prints
The total U.S. retail revenue from conventional photo prints has declined steadily
since the dawn of consumer digital imaging with no expectation for future growth.
From a peak of $6.5B in retail film print revenue in 2000 revenues have declined
by >50% and that decline will continue (though at a slower pace as film prints hit
bottom).
Retail Conventional Print Revenue
(B$)
Digital & Film Totals
$3.00
$2.00 $2.56 $2.34
$2.27
$1.00 $2.15
$2.10
$0.95 $0.76
$0.00 $0.58 $0.47
$0.40
2008 2009
2010 2011
2012
Source: [F/22] Consulting
3
Retail Photo Output Projections Update – May 2009 PAGE 3
4. Market Opportunity – Conventional Prints
The peak of retail film print volume was 32B prints. While film prints
continue their decline toward zero digital prints at retail are estimated to
remain constant at +/-12B annual prints.
Total Conventional U.S. Retail Photo Prints
Digital & Film – B 4x6 Equiv.
20
15
4.0 3.22 2.5 2
10 1.7
5 11.1 11.7 11.9 11.9 11.7
0
2008 2009
2010 2011 2012
Source: [F/22] Consulting
4
Retail Photo Output Projections Update – May 2009 PAGE 4
5. Market Dynamics – Conventional Prints
Though retail share of prints continues to increase total film and digital
print demand at retail continues to decline as consumers select
alternative ways to share and preserve their images or postpone
post-capture activities.
Total Conventional U.S. Retail Photo
Prints
Digital & Film – B 4x6 Equiv.
15.5
15.2
15 14.9
14.5
14.2
14 13.9
13.5 13.4
13
12.5
2008 2009 2010 2011 2012
Source: [F/22] Consulting
5
Retail Photo Output Projections Update – May 2009 PAGE 5
6. Shifting Production at Retail – Conventional Prints
The share of prints made on kiosks continues to grow as consumers choose instant
gratification and as retailers opt for lower cost, lower touch, more environmentally friendly
print solutions. The deep recession has further dampened capital and labor investment
tolerance, particularly in a small and shrinking category which could further accelerate the shift
to kiosk printing. Kiosk=Red.
Central Fulfillment
Minilab & Kiosk Produced Prints •The U.S. market has a
serious retail fulfillment void
15 (B) as years of poor resource
management by both Kodak
10.6 10.2 and Fuji have virtually
10 9.5 eliminated all meaningful back-
9.0 2-store fulfillment.
8.2 •With an industry increasingly
5 3.86 4.36 4.81 5.16 dependent upon new product
5.53 innovation and introduction the
absence of back-2-store
0 fulfillment strips retail of one of
its most significant
2008 2009 advantages.
2010 2011 2012
Source: [F/22] Consulting
6
Driving Critical Streams of Retail Output Revenue PAGE 6
7. Share
Chain Drug and Mass Discount continue to dominate retail print activity with the 2 leaders in
those channels combining for nearly ½ of all retail prints produced. This is a
function, largely, of continued investment in technology, infrastructure and labor and that the
underlying share drivers are likely to continue to consolidate volume within those chains who
invest in new opportunities.
.
2008 Trends
•The category is very
6% 1% dynamic and under extreme
duress which could drive
Mass Discount further individual
10% retrenchment by specific key
32% Chain Drug retailers.
11% •There is no major retailer in
Wholesale Club the photo print business in
the U.S. that is immune to
Photo Specialty severe cost-reduction
pressures nor to serious
Food calls for continued
40% Other investments in space, labor
and, certainly, capital
outlays.
•Recent events at Ritz and
Rite Aid are examples of
how share can shift quite
Source: [F/22] Consulting
dramatically from year-2-
year. 7
Driving Critical Streams of Retail Output Revenue PAGE 7
8. Barriers
Barriers to Successful Transformation
Recession (investment resources and determination diminished)
Leadership (who shines a sustained light on success)
Retailer and Vendor Silos (failure of merchant organizations and .com organizations
to collaborate effectively, failure of vendors to deliver the full-suite of possible products and
services)
Continued failure to effectively connect the consumer from home to
on-demand retail fulfillment.
Insufficient market penetration of critical enabling technology (e.g.
duplex printing, CD/DVD publication, wide-format printing)
Failure of the industry to develop and deliver meaningful, high-
volume everyday personalized products.
8
Retail Photo Output Projections Update – May 2009 PAGE 8
9. Personalized Printed Retail Products
Demand for popular products such as photo books, calendars, greeting
cards, posters and pages will fuel growth trends and promising opportunities.
Key Growth Drivers
Printed Personalized Products •Dramatic
(Millions) improvements in
create and order
$1,500 software.
$1,157
$917 •Create and print
$1,000 from home pc.
$651
$388 $509 •Everyday products
$500
such as printed
$0 album and scrapbook
pages.
2008 2009 2010 2011 2012 •Proliferation of
poster and collage
Printed Personalized Products (Millions)
options
•New retail products
with print fulfillment
Source: [F/22] Consulting
components.
9
Retail Photo Output Projections Update – May 2009 PAGE 9
10. Personalized Products Seasonality
The current concentration of demand for personalized printed products around the year-end holidays
results in poor manufacturing and distribution efficiencies as well as lost revenue opportunities. The
industry must develop and market suites of products that have year-round relevance and demand.
Key Opportunities
Distribution of Retail
Print Output Revenue Conventional
Printed
Personalised
•User-friendly client software
by Month (B$) Prints Prints for PC creation and ordering
Jan 9% 3% for print-in-an-hour.
Feb 5% 3%
•Album and Scrapbook Pages
Mar 5% 3%
Apr 5% 4%
on demand from PC or kiosk.
May 7% 7% •Posters and collage prints
Jun 11% 5% •Everyday greeting cards.
4%
Jul 11% •Self-Service, low-cost, low-
Aug 11% 4%
3%
touch personal DVD on
Sep 9%
Oct 8% 2% demand.
Nov 6% 22% •Licensed products of all sorts.
Dec 13% 40% •Open systems to enable on-
ramps from any internet site.
Source: [F/22] Consulting
10
Retail Photo Output Projections Update – May 2009 PAGE 10
11. Personalized Printed Retail Products
Demand for popular products such as photo books, calendars, greeting
cards, posters and pages will fuel growth trends and promising opportunities.
Key Growth Drivers
Printed Personalized Products •Dramatic
(Millions) improvements in
create and order
$1,500 software.
$1,157
$917 •Create and print
$1,000 from home pc.
$651
$388 $509 •Everyday products
$500
such as printed
$0 album and scrapbook
pages.
2008 2009 2010 2011 2012 •Proliferation of
poster and collage
Printed Personalized Products (Millions)
options
•New retail products
with print fulfillment
Source: [F/22] Consulting
components.
11
Driving Critical Streams of Retail Output Revenue PAGE 11
12. Personalized Printed Retail Products
Dramatic growth of printed personalized output turns a contracting
category into a growth opportunity.
Total Retail Printed Output (B$)
$5.00
$4.00 $0.59
$0.75 $0.99 $1.32 $1.58
$3.00
$2.00 $3.51 $3.10 $2.85 $2.61 $2.50
$1.00
$0.00
2008 2009 2010 2011 2012
Conventional Prints Personalized Printed Products
Source: [F/22] Consulting
12
Retail Photo Output Projections Update – May 2009 PAGE 12
15. New Revenue -Personalized Event Celebration Bundles
• Birthday
• Anniversaries
• Family Gatherings
• Class Reunions
• In Rememberance
• ….and much more!
15
Retail Photo Output Projections Update – May 2009 PAGE 15
16. New Revenue - Commercial Image-Rich Printed Output
• Flyers
• Menus
• Direct Mail
• Catalogs
• Image-Rich Business Cards
• Banners
• Interior and Exterior Signs
• Variable Data Advertising
(circulars, handbills, etc.)
• Variable Data Direct Mail
Materials
• ….and much more!
16
Retail Photo Output Projections Update – May 2009 PAGE 16
17. New Revenue -Commercial Image-Rich Merchandise
• Employee
Recognition and
Awards
• Logo Apparel
• Logo Keepsakes and
Promotional Products
• Licensed Products
• ….and much more!
17
Retail Photo Output Projections Update – May 2009 PAGE 17
18. New Revenue - Retail Products with Output Components
• Photo Albums &
Software Bundles
• Digital Scrapbook &
Software Bundles
• Collage Frame and
Software bundles
• Album, Scanner &
Software Bundles
• ….and much more!
See www.siannaimages.com
18
Retail Photo Output Projections Update – May 2009 PAGE 18
19. New Revenue - Licensed Content for Consumer and Commercial Output
• Disney Characters & Movie
Releases)
• Mattel
• Hasbro
• Martha Stewart
• NFL
• NBA
• MLB
• NASCAR
• Warner Brothers (Characters &
Movie Releases)
• Pixar (Characters & Movie
Releases)
• Celebrities
• Events (Festivals, Major Sports
Events, Concerts, etc.) 19
Retail Photo Output Projections UpdateMore 2009
• And Much – May PAGE 19
20. New Revenue - Consumer Digital Archive & Celebration Products
• Scan-2-DVD Media Retail Revenue
(Millions)
• Transfer Tape-2-DVD
• DVD Personal Movies $250
from Still & Video Images. $200
• Archive Image $150
Collections on DVD. $100
• Event Celebration and $50
Sharing on CD or DVD. $0
• ….and Much More!
Movie DVD CD DVD
20
Retail Photo Output Projections Update – May 2009 PAGE 20
21. New Revenue - Commercial Digital Archive & Promotion Products
• Archive DVD for
Company Records.
• Company and
Product Promotions
on DVD.
• DVD Demo
Promotions for P.O.S.
Education.
21
Retail Photo Output Projections Update – May 2009 PAGE 21
22. Total Retail Photo Output Revenue Opportunity – B$
Increased awareness, easier create and order access, improved
merchandising, new product development disciplines, and new
technology will all drive category growth opportunities at retail.
Total Retail Category Output – $B
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
2008 2009 2010 2011 2012
Conventional Prints Personalized Printed Output
Merchandise Media
22
Retail Photo Output Projections Update – May 2009 PAGE 22
23. Summary
Conventional printing will continue to decline
Personalized printing can offset the lose of conventional
print revenue
Photo Merchandise probably will add annual category
revenues exceeding $750 million within 5 years.
There are major barriers to harvesting new streams of
revenue and margin that will take resolve and urgency to
address.
The opportunity for substantially more revenue growth
than herein projected is real.
23
Retail Photo Output Projections Update – May 2009 PAGE 23
24. [F/22] Consulting, Inc.
Frank Baillargeon
208-939-3301
fjbaillargeon@f22consulting.com
For information please visit our website www.f22consulting.com
24
Retail Photo Output Projections Update – May 2009 PAGE 24
