Death of Kodak; Death of Film

Ryan Patrick O'Hara

Ryan Patrick O'Hara

Veteran
http://money.cnn.com/2011/09/28/technology/thebuzz/index.htm?iid=HP_LN

It's coming.


Celluloid film is so expensive and chemically difficult to make, the death of Kodak will surely destroy what life film has left. People say film will live on as there will be purists who carry it on.

That is rubbish. I've discussed this before, but if you think film is expensive now, wait until it's no longer made in large batches, in state-of-the-art facilities, and with almost a century of experience.

You can't make celluloid film in a bathtub.


So the death of film may not be from digital cameras or even lack of popular support. If kodak goes down, so will film. Fuji still exists, and although I don't know their financials, any DP in Hollywood knows that Kodak is the big dog.


Goodbye Kodak, Goodbye film. I hope Kodak restructures or sells off it's celluloid cinema film division, because right now it's a sinking ship and taking our film stocks down with it.
 
Ryan Patrick O'Hara said:
http://money.cnn.com/2011/09/28/technology/thebuzz/index.htm?iid=HP_LN

It's coming.


Celluloid film is so expensive and chemically difficult to make, the death of Kodak will surely destroy what life film has left. People say film will live on as there will be purists who carry it on.

That is rubbish. I've discussed this before, but if you think film is expensive now, wait until it's no longer made in large batches, in state-of-the-art facilities, and with almost a century of experience.

You can't make celluloid film in a bathtub.
Click to expand...

And just when I bought an 8mm Bolex a few months ago...

But as for Kodak...

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Kodak has been increasingly relying on licensing for revenue. The company also announced in July that it is exploring the sale of more than 1,100 patents tied to digital imaging.
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Kodak has been involved in digital imaging for 'years', and the wonder on my part has always by, why hasn't it gotten into this market with as much strength as say Fuji, which vacated the 'semi pro DSLR' market, but got further into the digital sensor production market. Sometimes it really is difficult to ferret out who designs and builds what these days, but it seems a growing trend in every market that a company will have an 'intellectual property', then license to manufacture with a number of companies that actually produce a product you buy...
 
Ryan (stock master)- Is there any possible upside to buying EK if they had a buy out from another company for it's patents? What do you think would happen to it's shares?
 
Well one thing to remember is that even if Kodak did go down, it is more likely someone would buy them up for cheap and while it would be a loss for Kodak, a gain for another company, who could continue production of film. I am sure there is a lot of money still in it for the pro market for awhile.

The one thing to consider is acquisition versus delivery. I think it will live on in acquisition for some time just like tape has in both analog and digital capacities. There are STILL many people professionally using tape yet VERY FEW people use VHS or Cassette (audio) at home. Even now, tape in professional capacity is phasing out as solid state media has been getting better and cheaper, and more reliable.

It will go I believe, but the timeline is anyones guess.
 
hunter richards said:
Ryan (stock master)- Is there any possible upside to buying EK if they had a buy out from another company for it's patents? What do you think would happen to it's shares?
Click to expand...

Yes. There is that potential. If someone buys Kodak out, they will offer more than what the share is currently worth. So depending on how the big shareholders of EK respond, the buy out offer can differ, but it will always be a nice quick buck. Shareholders always seem to win with a buyout, so long as they are currently doing well with the current stock price.

If you bought the stock for say 10/share, and it sinks to 2/share, and then a company offers and successfully buys the shareholders out for 5/share.... you still lose. Depending how you look at it.

However, that is a buy-out. If Kodak simply sells their patents, you'll see an immediate cash flow, which is good since it seems they are bleeding their cash out (1 billion -> 700 million).
Selling these patents would earn a quick buck, but would not necessarily solidify the companies future. They will still need to restructure and find a good business plan. They can take the patent money and re-invest it in this new business plan... like further pursuing printers, digital cameras, etc.

If they simply sell their patents, (not in a buy-out of the entire company), and dont change their business model... they will simply be the same flailing company, but now with more cash and without their valuable patent assets. This just means they will continue to bleed out, but for a longer amount of time.

From the article, it seems printers are a lucrative pursuit Kodak is looking at. If this is the key to making the company solvent, they might consider selling their patents and using that money to further restructure the company in that direction. They can't afford to do nothing, that's for sure.


So to answer the question... there are many potential outcomes to investing in EK right now. There is potential to make lots of money because of either a potential buyout or because the stock is so low, that successful leadership and restructuring can rather quickly get the stock off the floor. However, if leadership and restructuring fails, and nobody buys them out, but instead just buys the patents... then we see the same failing company with less assets and more cash... this just means the ship will sink much slower.

I don't usually like to invest based on buy-out rumors. It's risky, especially a company that isn't doing well at the time. I would be more interested in investing in EK if they announced a strong and bold new direction. I don't think the stock price will raise if they simply sell patents. If they don't announce a restructure and they sell some of their strongest assets, it might actually scare share holders.

You never know. It's always best to invest in companies you think will succeed, not the ones you think might fail and get bought out. Because sometimes nobody does.
 
The division that makes motion picture film emulsions (negative, intermediate and print stock sales) accounts for 10% of EK's total consolidated revenue for 2010. So it's not the cash cow of the company. Quite small revenue wise compared to the consumer services and products, but still substantial since it's one of the big three divisions that make up the entire company.

I hope this trend isn't a sign, but it appears that Kodak has scaled its R&D way back for the division which creates the motion picture film products among other entertainment related products and services.

In 2008, they spent $49,000,000
In 2009 they spent $33,000,000
In 2010 they spent $19,000,000

They are spending much less than 1/2 of what they did in 2008 on R&D in 2010. Maybe that reflects Vision3's birth, just a couple years ago? I hope so, otherwise it looks as if we can expect a rising amount of neglect or slower progress in film emulsion development.

Net sales are also falling, and fast.

In 2008 the Film and Entertainment Group had a total of $2,987,000,000 net sales.
In 2009 the Film and Entertainment Group had a total of $2,257,000,000 net sales, down 24% from '08.
In 2010 the Film and Entertainment Group had a total of $1,767,000,000 net sales, down 22% from '09.

Not trying to say it's all over... but with almost a 25% fall each year in net sales, a 60% drop in R&D during the same two year span, and a company finding itself bleeding cash and considering selling patent assets, all this might be a bit alarming.

Let's just say Kodak has more to worry about than Roger Deakin's shooting on an Alexa. They still have NFL films, right? (NFL films buys more Kodak motion picture stock than ALL movie studios combined... or so I was told by a Kodak rep.)
 
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Yup. I met one of their DPs who does all of the "qb throws the football into the end zone and the football is always in focus while he zooms out and racks focus" at 120 fps. He had about 30 mags of film next to the camera and 2 camera assistants that were running their asses off.
 
Jordan Scott Price said:
Wow, seriously?
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Yeah... they have multiple cameras shooting s16mm for every single NFL game. How many games are there every season? 256? Each one several hours long? Some cameras shoot 120fps for slow motion action. That's a lot of film. I think NFL films also has it's own film lab, to process and develop all that negative.

NFL films is Kodak's #1 client.
 
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This coupled with the fact that "film camera" manufactures have all but ceased new products is a terrible omen for film.
 
phudsontx said:
This coupled with the fact that "film camera" manufactures have all but ceased new products is a terrible omen for film.
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Yes. But the good news is, cameras last forever. The image is based on film stock and lens... that is all. So a 50 year old camera that properly pulls film through at 24fps, can look identical to the newest film camera that does the same, as long as they have the same film stock and lens.

The beauty of mechanical cameras versus digital electronic ones.

Regarding making new film cameras, you are probably right. The 416 was introduced just around five years ago (2006). That is a modern and KILLER 16mm camera. Most likely the last ever to be made as well. I highly recommend the 416. It's beautiful.
 
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Rick Burnett said:
Well one thing to remember is that even if Kodak did go down, it is more likely someone would buy them up for cheap and while it would be a loss for Kodak, a gain for another company, who could continue production of film. I am sure there is a lot of money still in it for the pro market for awhile.

The one thing to consider is acquisition versus delivery. I think it will live on in acquisition for some time just like tape has in both analog and digital capacities. There are STILL many people professionally using tape yet VERY FEW people use VHS or Cassette (audio) at home. Even now, tape in professional capacity is phasing out as solid state media has been getting better and cheaper, and more reliable.

It will go I believe, but the timeline is anyones guess.
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That's correct, and the 2010 CES saw the death of new consumer DV magnetic tape video cameras. Panasonic released 6 new models, Sony 13, JVC 10, Canon 9, Samsung 3, Sanyo 2, Toshiba 2 and Yashica 1.

So that was 46! new con/prosumer DV cameras with only ONE running magnetic tape .. it's the current Canon HV40 so it wasn't a new release it's still in production from 2009.

DV mag. tapes are still being manufactured and sold, but once sales drop below a certain level, the big players will sell their tape manufacturing plants to small start-up outfits who want to make a quick buck.

They'll cut costs to keep going .. eg: I once owned an audio cassette duplication company with a big Otari loop bin duplication plant, output 6-10,000 cas. per shift. We used BASF cassette tape on pancakes and almost overnight they sold to the Korean Qantagey company. Within 3 months we had defective tape trouble.

If it wasn't for the gigantic third world market, we'd have seen the end of magnetic recording tape by now.

Maybe Kodak film will follow the same path when the NFL goes digital. Sad.

Cheers.
 
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Ryan Patrick O'Hara said:
The division that makes motion picture film emulsions (negative, intermediate and print stock sales) accounts for 10% of EK's total consolidated revenue for 2010. So it's not the cash cow of the company. Quite small revenue wise compared to the consumer services and products, but still substantial since it's one of the big three divisions that make up the entire company.

I hope this trend isn't a sign, but it appears that Kodak has scaled its R&D way back for the division which creates the motion picture film products among other entertainment related products and services.

In 2008, they spent $49,000,000
In 2009 they spent $33,000,000
In 2010 they spent $19,000,000

They are spending much less than 1/2 of what they did in 2008 on R&D in 2010. Maybe that reflects Vision3's birth, just a couple years ago? I hope so, otherwise it looks as if we can expect a rising amount of neglect or slower progress in film emulsion development.

Net sales are also falling, and fast.

In 2008 the Film and Entertainment Group had a total of $2,987,000,000 net sales.
In 2009 the Film and Entertainment Group had a total of $2,257,000,000 net sales, down 24% from '08.
In 2010 the Film and Entertainment Group had a total of $1,767,000,000 net sales, down 22% from '09.

Not trying to say it's all over... but with almost a 25% fall each year in net sales, a 60% drop in R&D during the same two year span, and a company finding itself bleeding cash and considering selling patent assets, all this might be a bit alarming.

Let's just say Kodak has more to worry about than Roger Deakin's shooting on an Alexa. They still have NFL films, right? (NFL films buys more Kodak motion picture stock than ALL movie studios combined... or so I was told by a Kodak rep.)
Click to expand...

Still you have to think that $1.7 Billion in sales is not something to sneeze at. It might be advantageous for the Film and Entertainment group to be spun out as a separate operating unit, or sold, and gotten out from under the death spiral of the consumer imaging division. With the money already spent on tooling and manufacturing, and over a century of R&D, I would think that somebody would take that business and at least try to make a go of it.

The article also noted that their might be a windfall for them if they can get licensing agreements out of their patent lawsuits. I hope so.

I know that digital will win out in the future, but,dang, a world without Kodak would be a sad world, at least for me.
 
wow....
how unfortunate, but understandable. I always wondered why Kodak didn't go into more digital cameras. They were on the cutting edge in the mid-90s or so.
 
This is what happens when companies don't change enough at the right speed to the changes in technology. Same thing with the music industry and the Internet. Kodak should have embraced digital a lot quicker with a lot more enthusiasm instead of just hanging around. Make your digital cameras special like Apple would. Predict the future of media consumption like Amazon is doing. If Kodak does go down I'm sure motion film won't die with it - other companies would react fast for that kind of business and the patents it carries.
 
I shot a boatload of film, but back when I started that's all there was. I sold all my film gear years back when it got too expensive for most of my clients to acquire on film, except an old Bolex as a desk piece. It got to the point where we installed a dark room for developing and a telecine in-house to try and save costs, but too few of my clients wanted to up for film when this new fangled Digital was the hot thing. Who would have known that all the tripods, follow focus, matte box, lenses and such that we sold, would be useable with this latest crop of modern digital cameras. I'll have to confess the biggest thing I will miss about film, is the smell. From the time I was a young boy shooting stills I always dug the smell of film when you tore open the foil pouch or popped open a can.

RIP
 
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