1) Demand for conventional prints has declined significantly and will continue to fall, while demand for personalized printed output like photos has grown and will continue growing through 2015 as new products are introduced. 2) Kiosk prints are becoming a larger percentage of total prints as retailers turn to lower-cost printing solutions, but some retailers are abandoning in-store printing entirely. 3) The growth of personalized printed output will drive overall category growth and revenue beginning in 2013, though seasonal demand spikes around holidays are a challenge for retailers.

1. U.S. Retail Photo Output 2010-2015

2. Situation Analysis
• Conventional print volume (film + digital) and category revenue
continues to fall and that fall has accelerated in 2011.
• Walmart Stores, which enjoyed share dominance for numerous
years, has slipped from the top position, with promotional drug
chains Walgreens and CVS gaining share.
• Personalized printed output continues to be the on-demand print
category growth engine for retailers and photo merchandise
delivered to store or home continue to show substantial growth
potential.
• Kiosk prints as a % of total prints will grow as retailers increasingly
turn to lower-cost, lower-touch print solutions even as consumers
opt for instant gratification.
2
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 2

3. Situation Analysis - 2
• Seasonal demand spikes are a significant and increasing challenge for retailers as
demand shifts from everyday conventional print demand to personalized
products, with primary demand concentrated from mid-November through late-
December.
• With an increasing number of retailers (especially regional chains) abandoning or
likely to abandon in-store printing services the smaller pie of revenue will be
shared by a few committed retailers (esp. CVS and Walgreens).
• There are significant barriers to growth of photo output revenue for retailers.
These include: a) alternative output options such as strong B2C online photo
retailers such as Shutterfly, Snapfish, Kodak Gallery, Picaboo, MyPublisher, Blurb,
and even Apple, b) significant purchase friction at different points of contact such
as poor architecture of online and kiosk create and order experiences, c) rapidly
changing consumer imaging behavior…especially the adoption of Facebook as
the primary photo sharing choice and the adoption of mobile devices as primary
image capture devices for many households (can an will be an advantage if
addressed successfully).
3
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 3

4. What’s Dragging Revenue Down?
Consumer Adaptation Institutional Failure
• DSC’s that provide complexities and no connected
•From Selective Printing to “no solutions.
printing” • Unnecessarily “bloated” image file size.
•
•From Email & Photo Sites to Social Retailer retreat (capital, labor, space, advertising)
• No vendor partners driving awareness and demand for
Media (esp. Facebook , Flickr, Picasa the category
Web Albums, Smugmug, etc.) • Far too many unnecessary friction points for consumers
to navigate from capture to retail output services.
•From DSC to Cameraphones, • Far too little effort to develop and deliver suites of
Smartphones and Tablets. meaningful new output products.
•From Still Images to Short-Form Video
4
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 4

5. Total On-Site Photo Print Output
2010-2015
($B)
The growth of $6.00
personalized
printed output is $5.00
not yet on a trend $4.00
to compensate fully
for the loss of $3.00
conventional print $2.00
consumption but it
will drive overall $1.00
category growth $0.00
revenue beginning 2010 2011 2012 2013 2014 2015
in 2013.
Conventional Print $ Personalized Print $ Total $
5
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 5

6. Retail Digital Print Unit Projections
(B 4x6 eq. units)
•Demand for 20.00
Conventional prints has
15.00
and will continue to fall
off steeply. 10.00
•Demand for
5.00
personalized printed
output has and will 0.00
continue to grow as 2010 2011 2012 2013 2014 2015
awareness, access, and Conventional Film & Digital Prints
new products continue Personalized Prints
to accelerate. Total Prints
6
Retail Photo Output – 2010-2015
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 6

7. Self-Service Prints vs. Minilab Prints
(Conventional 4x6 Equiv. Prints - B)
•There are forces at work that
16.00
advance the need for minilab
14.00 printing (especially web-2-store
12.00 printing, and demand for new
10.00 personalized products).
•There are, simultaneously, forces
8.00 at work that limit the investment
6.00 interest in minilabs (especially
4.00 labor costs, operational
complexities, and declining
2.00
revenues).
0.00 •Other trigger events which could
2010 2011 2012 2013 2014 2015 radically alter share of prints
would include demnd for printed
Kiosk (Self-Serve) Prints output from mobile devices and
"Minilab" (supported) prints Social Networks such as Facebook
and Google+.
7
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 7

8. Seasonality of Print Revenue
2014
•Current personalized printed
products are dominated by products
with demand primarily from mid-
November through late-December.
•As the share of output from
personalized printed output grows
this trend threatens to shift even
more volume to a narrow holiday
window.
•The popularity of photo
merchandise, which is currently
dominated by holiday gift giving
increases the challenges of
equipping and staffing this changing
category.
8
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 8

9. Personalized Photo Prints
Share of Revenue - 2010
9
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 9

10. •Threats •Opportunities
•Accelerated non-printing behavior by •Facebook members are now 1-Click away
Threats & Opportunities
consumers (e.g. Facebook, Twitter sharing as
beginning and end of most post-capture
from quality retail printing
activity).
•Accelerated category retreat by major •Rapid development and effective
retailers (reduced capital investment, reduced merchandising of streams of critical new
labor commitment, reduction of footprint or personalized printed output (especially
relocation to service clusters, reduced products with year-round appeal).
promotion and advertising)
•Widespread adoption of camera phones as •Content becomes a powerful economic
primary household capture device (devices engine and drives demand for boundless new
and apps on smartphones provide the ease personalized output opportunities at retail.
and immediacy consumers want….plus the
best camera is the one you have with you!)
•Failure to develop and effectively •Major retailers in combination with industry
merchandize and promote critical year-round partners aggressively pursue and support
high-volume personalized printed products. awareness campaigns.
•Output from mobile devices
•New generations of capture devices that are
always connected to easy retail product
solutions.
10
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 10

11. Engines of Growth
Meeting consumers where they love to be with simple,
meaningful, affordable solutions (e.g. easy print from Facebook ,
Google+, Mobile Devices and pick-up at retail)
Personalized Event Celebration Products or Bundles
Home Décor
Commercial Image-Rich Printed Output
Retail Products with Output Components
Licensed Content for Consumer and Commercial Output
Focus on a select number of new high-demand products with
year-long demand
11
Retail Photo Output – 2009-2014
Confidential Property of [F/22] Consulting, Inc. - 2010 PAGE 11

12. Thank You
FRANK BAILLARGEON
Retail Photo Output Projections Update 12
PAGE 12