The Decline of Kodak...What Happened?

[Music] codec used to be the biggest name in photography not one of the biggest the biggest if you come across an old photograph particularly one taken around the 1970s there's a really high chance that it was taken with a Kodak camera using Kodak film and developed on Kodak paper using Kodak technology they were the absolute leader of the entire industry yet in 2012 they went bankrupt I don't want anyone to get the wrong impression they do still exist today in a very different and much smaller capacity but you can't deny it they've experienced a pretty massive decline from extremely profitable to bankrupt from king of the industry to what they are today so what happened most people would just call them Kodak though many know them by their full name Eastman Kodak which was started by two guys named you guessed it George Eastman and Henry strong you thought I was gonna say Kodak there Kodak actually isn't the name of a person like you may think does anyone know where the name Kodak comes from I would give you a second to think but you wouldn't come up with it it doesn't mean anything George Eastman just thought it was a good sounding name he saw it as a unique word that's hard to mispronounce plus he just liked the letter K it just shows how names don't always need to have meanings sometimes it just has to sound good Kodak yeah sounds pretty good it was originally the name of his camera but then he decided to make it the name of the entire business and this was back in the late 1800s when he came up with this name and really George Eastman is the man to focus on when we're talking about Kodak Henry strong was more of an investor see before Kodak photography was a pain it involved big heavy cameras you would have to quickly develop the pictures which meant you had to keep all those heavy supplies nearby I'll admit I'm not an expert on 19th century photography but I do know that 20th century photography was much easier and that's because of George Eastman made all these innovations that made photography available to the general public in the beginning the company slogan was you press the button we do the rest which I know today doesn't sound very impressive but in the late 1800s I'm sure that sounded like magic you buy the camera take a bunch of pictures send in the whole thing to Kodak and they send you the pictures now with a product that's so much better than anything else on the market it's easy to see how they became so big and they didn't just rely on their early success they kept going notably in 1935 Kodachrome it's a specific type of film used for color images Paul Simon even used it as the name of one of his popular songs I found this interesting to process the film it was a complicated expensive process so Kodak would sell the film with the cost of the processing built in which forced everyone to get it processed by Kodak in 1954 there was a legal ruling that said it was unfair to the others who were willing to process the film and said they couldn't bundle the cost of the film in the processing after that the price of the film went way down in 2009 Kodak stopped making it altogether which says something about the decline of Kodak at that time and the decline of film and how the two may be related Kodachrome was just one of many significant ways Kodak contributed to the industry I already said that in the 1970s Kodak was practically synonymous with photography in 1976 they had an 85 percent market share in cameras and 90 percent market share in film they were so dominant that it was unfair to the competitors they had a great marketing campaign too with the term Kodak moment it was used to refer to any moment worthy of a photo someone gets married that's a Kodak moment you get a new car that's a Kodak moment anything you want to remember people tend to take photos at emotional times and Kodak found a perfect way to capitalize on that with that little two-word phrase people associated the Kodak brand with life's meaningful moments this was a very successful campaign if you're too young to remember it go ask someone who older they'll know all about it everything was so good for so long with Kodak and we still have the question of how did they fall so far here's a graph I made showing their sales for the 20 years leading up to their bankruptcy you could see that things weren't exactly perfect for any part of it they had some troubles throughout the 90s but it wasn't anything severe enough to lead to a bankruptcy it looks like the period where things got really bad started in 2005 and when we look at the graph for net income we can draw the same conclusions now I'm sure when you first saw the title of this video your first thought was digital cameras and now that I show you these graphs it's just confirming what you already thought and I'll go one step further this graph shows the sales of film and digital cameras the digital cameras crept up in sales over this time overtaking the film cameras for the first time in 2003 and by maybe 2005 or 2006 they were dominating the market so it would make perfect sense that the film company Kodak would start to have some massive issues starting around 2005 and I agree I agree with all of it but it's not as simple as it may seem the picture we like to paint here is a ridiculous one it's that in the 1990s when digital cameras were on the rise Kodak ignored it and only once it was undeniable that digital cameras were the way of the future is when they finally made a desperate attempt to switch over but it was too late others beat them to it is that what you were picturing is that basically what you expected this video to say because that's not what happened you have to give Kodak a little more credit do you know who invented the digital camera it was Kodak in 1975 Steve Sasson who worked for Kodak invented the digital camera three years later Kodak received a patent for it throughout the 90s when digital cameras were on the rise Kodak was selling digital cameras they didn't ignore them in 2005 remember 2005 the year everything went bad do you know who was the leader in the u.s. digital camera market it was Kodak at the point I'm sure you're confused I sound like I'm contradicting myself first I say the digital camera killed codec and then I say Kodak was big in the digital cameras it's a complicated issue many people have studied it and delivered different conclusions but what I'm giving here is the conclusion that makes the most sense to me and most of it happens to be the more common conclusion codec didn't focus on digital cameras enough they didn't ignore them but they didn't give them their full attention either they treated them as more of a side project really they underestimated just how big they would get and how could the biggest camera company of all time fail to see where the industry was headed to that I say it was a blind optimism here think of your local sports team go outside and ask some fans what they think of their chances for next year they'll talk about how they just got this new player that's going to turn things around or how they just got rid of a player that was keeping them down they'll say next year is gonna be our year and then go travel somewhere else and ask someone what they think of that same team I doubt that other person would have such a positive outlook same case with Kodak just like the sports fan they wanted something to be true so bad they started believing it was true they ignored the facts and saw what they wanted to see they were motivated to believe that digital cameras weren't the future let me explain why they were so motivated to believe this for one they knew about film they were experts they had a hundred years of experience they perfected all the processes even invented most of them they were producing some of the best stuff at the cheapest prices and had one of the most trusted names of any industry and film is how they made their money they hardly made any money from the camera sales they would just give away the cameras if they needed to those were just things people needed to have before they would buy their film and the prints with digital cameras no film and in many cases no prints the thing that made them very little money was becoming the only thing people wanted for Kodak digital cameras become the industry standard was very bad so they were motivated to ignore the signs and not give the digital cameras the focus they needed now I said Kodak was the market leader in 2005 but it wasn't by much they were no longer untouchable they were now competing just like everyone else by 2010 they had a 7.4 percent global market share behind Canon Sony Nikon Samsung and Panasonic they were making a switch into consumer printers but that just forced them to compete with HP and others that were more well-known in that industry and Plus consumer printers probably wasn't the most forward-thinking move they could have made anyway it all led to their 2012 bankruptcy as I said they came out of the bankruptcy and still exist today in a much different way they deal with other technologies they call themselves a global commercial printing and imaging company their revenues are much smaller and still decreasing each year 2016 was their first profitable year so I suppose that's a move in the right direction but effectively and in everyone's minds Kodak has failed and I struggle to think what they should have done differently in 1975 when Steve Sasson invented that digital camera their response was to keep it quiet I hope it never gets big because then their film sales would suffer while the better response would have been to embrace it in the same way that they had a jump start on everyone else with the film camera in the 1800's they could have had another jump start but they let it slip away they were slow about it but even if they had handled the situation better where would they be today everyone has a really good camera on their phone so the digital camera business isn't exactly where you would want to be either maybe in a different reality all of our phones would be made by Kodak that'd be weird maybe we can change the way we perceive Kodak shirred they made some mistakes and today are just a shell of their former selves but they had a good run they revolutionized an industry and led that industry for a hundred years they did some great things for photography and maybe it was just their time to go what they did best was no longer needed in today's world it'd be impossible for them to exist in the same way down the line I'd like to think they'll be remembered for their century of success and innovation and not their decades of struggle let me know in the comments do you look at Kodak any differently after watching this do you agree with what I said about the reasoning behind their decline there's many opinions out there but most of them don't stray too far from what I presented other potential aspects of this include a lack of communication from upper to lower management a mindset that they control the industry and people will switch to digital when they say it's time and just a false sense of security they felt untouchable when clearly they weren't I recommend you do some further research if you want to hear more about any of those it's a deep subject this video could have gone on for an hour but I tried to keep it to the more important parts and the core of the problem don't be surprised if you see more about Kodak on this channel in the future but for now let me know where they went wrong I'd like to hear what you have to say thank you for watching [Music]

Channel: Company Man

Views: 572,792

Rating: 4.9136944 out of 5

Keywords: Kodak, Cameras, Film, Decline, Company Decline

Id: eVrmFgvEnAA

Length: 12min 18sec (738 seconds)

Published: Wed Jun 13 2018

Reddit Comments

[u/GrownBravy]

It’s so weird to me that Kodak’s decline is more than just the digital camera breaking into the consumer market. Nobody was printing anymore. And it’s because of myspace and facebook.

Think about it. Kodak has their reputations for film and for prints. You have local drug stores and chain stores running expensive to operate labs using proprietary paper and chemistry, maybe between 3-4 per town. People coming in and spending $7 for processing and prints. $10.99 for doubles. They come back and make reprints at like 29-39¢ ea. Enlargements? 5x7 @1.49ea, 8x10 @3.99 each. Come back in an hour. This was everywhere. Running a lab was big business back in the day.

Digital is far easier to share. you dont even need to print. They had to invent a need to have prints, but that didnt catch on. Film was just one half of their total service. Film is an upsell for printing, and something like $4 for a roll of film meant at least $7 later with processing, with the ability to get reprints whenever, meaning there’s always money to be made later.

Why else would they try and sell printers? They’re retooling their most successful revenue stream. And it didnt work.

It’s myopic IMO to think it’s just because of digital. Social media turned out to be the silver bullet.

[u/toomanybeersies]

Here's a great article that discusses why Fujifilm managed to succeed, and Kodak didn't. It was a culture of complacency, as well as a series of poor investments and pivots that did them in.

The move from film to digital was a fundamental shift from a recurring revenue model based on consumables to a model reliant on one-off purchases.

Fujifilm, saw the writing on the wall in the 1980s and strategised to diversify outside of the photography industry. For instance, they invested in cosmetics, as they were fundamentally a chemical company that made film, not a photography company.

People always talk about the decline of Kodak, but never talk about why Fujifilm managed to succeed when they made the same products.

A large part why Fujifilm succeeded was corporate politics, the right people managed to get into the right positions to enact the change they needed. This never quite happened with Kodak.

[u/thedjotaku]

Easy answer - I studied during my Master of Systems Engineering degree - no company wants to cannibalize itself. If film is doing well, why invest in digital? Same thing happened to the mainframe companies and the companies that used to make ginormous hard drives when the 3.5" form fact came out.

[u/lensupthere]

Kodak new exactly what was going on in 1997. They predicted it. They went as far to license the IVUE format from LivePicture (Sculley was CEO there after he left Apple) and turned that into FlashPix/PhotoCD. The purpose of PhotoCD was to confuse the marketplace and delay digital - which it did and allowed Kodak to reap billions in revenue.

I worked at the largest consumer software company during the 90's. Kodak was a partner - I was a product manager, both technical and marketing for our productivity software and the liaison with Kodak. I attended "Kodak's Software Summit's" and gave presentations and met with their engineers about what consumers would use/want in a digital camera. I think I still have my plaque from them, haha.

I managed our company's investment in LivePicture and was the main liaison with them too.

There's a lot more to this story, and the decisions that contributed to Kodak's fall began back in 1997.

I was there when it happened. This video is missing quite a bit of info that lead up to 2005.

[u/planepartsisparts]

Man I didn’t realize they invented the digital camera. If they did the patent right shouldn’t they have been able to get royalties from just about every digital camera out there? Imagine that, there are probably 10x as many camera roaming around the earth now than there were before. They “invented” the darkroom should have gone into that for digital like Adobe has done with Lightroom and Photoshop. They weren’t visionary enough to pivot from hardware physical product to a digital product. Very good video.

[u/gerikson]

This is a good balanced video.

[u/aburnerds]

At one point they used about 9% of all silver mined in the US.

[u/cropguy93]

Slightly OT: In UK the famous "Kodak Tower" high rise in Hemel Hempstead, often referred to as "Kodaktown" in the old days, finally shut a few years ago and is now blocks of flats:

http://www.ourdacorum.org.uk/content/places/kodak_tower_replacement

[u/cholley_doo]

their digital cameras were largely crap, it's unfortunate with all their heritage they didn't stay on top