Upcoming Film Price Wars - Kodak vs. Fuji...

Ron Todd wrote:

On Sun, 26 Sep 2004 14:16:33 -0500, "jjs" wrote:

"Ron Todd" wrote in message
. ..

Because it doesn't make _enough_ of a profit.

Well, .... With market CD rates at 4% would you be willing to put
your life savings in a bank at 0.5% so home buyers would get less
expensive mortgages?

You don't know what the **** you are talking about so you toss out some
kind of irrelevant, weak-ass innuendo. Give it a rest. Get a job.


You really don't see why it is the same?

This was an anon-troll, look at the reply address.
--

Stacey

On Mon, 27 Sep 2004 22:47:13 -0400, Stacey wrote:


....

This was an anon-troll, look at the reply address.

Sorry, my bad, sucked me in again.

On 26 Sep 2004 18:52:31 -0500, (Bob Monaghan)
wrote:


the short answer is that film is made in meter+ widths on machinery which
is then cut down to required sizes, including sheet film and 120 or 35mm.

often, the same machinery is used to run a series of batches of different
film stocks which are then cut down and processed and sold over the next 6
to 18 months or more out of frozen film stocks.

so if a film emulsion is available at all, it can be made available in any
standard film size (up to 8x10" anyway) and on whatever format (including
620 as an alternate to 120) you want. It used to be that a distributor
could order (minim. order around $10,000, and pay in advance) for formats
like 5x7" even if such formats were not otherwise available on the
standard Kodak catalog listings. At wholesale, that is a lot of film.

Film for Classics showed there was a larger market than Kodak and others
admitted for classic film formats like 620 and 127 etc. Now we have a
number of such specialty formats available from major distributors (like
B&H, Efke..) and mfgers.

I would bet that a film-only mfger freed from corp. pro-digital politics
would probably provide more formats, rather than less, simply because once
the film emulsions are produced, the cutting and packaging equipment is
also already there and paid for, so it might as well be used.

Before then, we will have to endure the trimming of marginal (if still
profitable) formats and emulsions from major mfgers like Kodak while they
first milk and then kill off their film based cash "cow" ;-)

The final point is that the migration of film production to overseas
(China's Lucky Film plants for Kodak etc.) further supports the idea of
lower cost film products in the future, as underlying costs will be low.
It will be hard to prevent direct exports from China etc. if they (kodak,
Lucky film, etc.) try to over-price their film for the USA market (a side
effect of world pricing info and Ebay etc. on arbitraging such price
differences to near zero).

So again, I think film costs are going down, and likely to stay down over
the long term...

p-) grins bobm


I agree with your points except for the price going down as the market
demand declines. With the decline in demand and the loss of
economies of scale prices should go up further accelerating the
decline of demand. I can't think of any examples where the decline in
demand of a mature product has caused a reduction in price to the
consumer and its continued existence in the market.

On 26 Sep 2004 18:52:31 -0500, (Bob Monaghan)
wrote:


the short answer is that film is made in meter+ widths on machinery which
is then cut down to required sizes, including sheet film and 120 or 35mm.

often, the same machinery is used to run a series of batches of different
film stocks which are then cut down and processed and sold over the next 6
to 18 months or more out of frozen film stocks.

so if a film emulsion is available at all, it can be made available in any
standard film size (up to 8x10" anyway) and on whatever format (including
620 as an alternate to 120) you want. It used to be that a distributor
could order (minim. order around $10,000, and pay in advance) for formats
like 5x7" even if such formats were not otherwise available on the
standard Kodak catalog listings. At wholesale, that is a lot of film.

Film for Classics showed there was a larger market than Kodak and others
admitted for classic film formats like 620 and 127 etc. Now we have a
number of such specialty formats available from major distributors (like
B&H, Efke..) and mfgers.

I would bet that a film-only mfger freed from corp. pro-digital politics
would probably provide more formats, rather than less, simply because once
the film emulsions are produced, the cutting and packaging equipment is
also already there and paid for, so it might as well be used.

Before then, we will have to endure the trimming of marginal (if still
profitable) formats and emulsions from major mfgers like Kodak while they
first milk and then kill off their film based cash "cow" ;-)

The final point is that the migration of film production to overseas
(China's Lucky Film plants for Kodak etc.) further supports the idea of
lower cost film products in the future, as underlying costs will be low.
It will be hard to prevent direct exports from China etc. if they (kodak,
Lucky film, etc.) try to over-price their film for the USA market (a side
effect of world pricing info and Ebay etc. on arbitraging such price
differences to near zero).

So again, I think film costs are going down, and likely to stay down over
the long term...

p-) grins bobm


I agree with your points except for the price going down as the market
demand declines. With the decline in demand and the loss of
economies of scale prices should go up further accelerating the
decline of demand. I can't think of any examples where the decline in
demand of a mature product has caused a reduction in price to the
consumer and its continued existence in the market.

Kodak's problem (ditto Fuji, Agfa..) is to maintain cash flows from film
in the face of falling demand, preferably by grabbing marketshare from
other mfgers (hence their press release statements on reduced pricing of
film in future comments etc.). They have the capacity to make, distribute,
and sell a lot of film at a very high markup (certainly relative to high
cost low markup digital hardware and cameras).

The marginal profits for film even at discounted prices are still huge.
the price to manufacture a roll of film is in the pennies a roll range (as
in Kodak's example of costs of fifteen cents to make a disposable camera
in China with a roll of film in it versus $1 cost in USA).

The economies of scale are essentially realized fully as soon as you
decide to make a batch of film emulsion (which is like 100,000+ rolls of
film equivalent emulsion area per batch - then cut up and rolled as
needed). That's a $10k to $50k decision, not a multi-megabuck decision.

The film making equipment is largely fully depreciated and long paid off.
Kodak is buying new capacity by buying overseas film makers (Lucky Film in
China..) rather than adding to their USA or foreign mfgering plants (which
they are contracting by 15,000+ employees etc., largely to cut high labor
costs in the USA vs. China etc. (see above disposable camera example
again) ;-( They aren't just cutting capacity, or they wouldn't be buying
Lucky Film in china while shutting down plants in the USA. They want to
maintain capacity, but do so at lower costs, so they can maintain profits
even in the face of a price war and declining film price levels at retail.

There aren't any R&D costs (for Kodak anyway), and little if any costs
over the last decade for basic film research in B&W or color either. They
made a very minor change in the coating (not emulsions) and promoted it
like it was a major big deal, but it wasn't ;-)

This is one reason I am fairly hopeful on film's longevity. You make a
roll of film for a nickel (or less) and sell it for dollar(s). That's a
cash cow ;-) Film making technology is not that complex (cf. Croatia and
China as third world players). You don't need hundreds of millions to
setup a plant. Today, it is probably lots cheaper to buy up bankrupted
assets from Agfa or Ilford or Polaroid etc. than to setup a plant with new
machinery. So in that viewpoint, it is even cheaper to get into the biz
now, and that should make it even cheaper to buy film (as they don't have
any new plant $ to recapture, any R&D on existing film products/processes,
and got the assets at a bankruptcy discount to boot! ;-)

Film prices in the USA will fall significantly because film has been
hugely overpriced here - as the example of the Kodak film re-imported from
the UK to sell grey market here shows. With demand falling rapidly (as in
17% last year), those artificially high prices have to fall or Kodak will
lose market share (plus volume of sales plus profits). In addition, China
is playing a "deflation card" by cutting production costs of film stocks
(e.g., from $1 to $.15 for a disposable camera is a 85% drop in costs ;-).
So films imported from China (Malaysia..) will put further downward
pressure on selling prices in the USA market (and Europe..).

In short, the film supply will remain large (maybe larger than now, given
China's expanding production for domestic/foreign sales), and demand is
falling (17% per year most recently). Hence, econ 101, prices have to
fall. ;-)

bobm
--
************************************************** *********************
* Robert Monaghan POB 752182 Southern Methodist Univ. Dallas Tx 75275 *
********************Standard Disclaimers Apply*************************

Bob Monaghan wrote:


Film prices in the USA will fall significantly because film has been
hugely overpriced here - as the example of the Kodak film re-imported from
the UK to sell grey market here shows. With demand falling rapidly (as in


The only film I see being more expensive in the US is Agfa's stuff. I
think most people would be suprised to here US prices are higher. Grey
market re-imports can reflect many things. The only people that know for
sure are the people selling to the importer.

Nick

From: (Bob Monaghan)

You make a roll of film for a nickel (or less) and sell it for dollar(s).
That's a cash cow ;-)

If this is actually true then why has Kodak had such dismal financial results
the past 10 years or so?

Film prices in the USA will fall significantly because film has been
hugely overpriced here

If this is actually true then why has Kodak had such dismal financial results
the past 10 years or so?

Bill

Bill Hilton wrote:

If this is actually true then why has Kodak had such dismal financial
results
the past 10 years or so?

Due to what?

Hi Bill,

Kodak has been losing $$ trying to buy marketshare and technology in
digital photo related markets - at one point, they were losing $100+ for
every digital camera they sold per some estimates. The large profits from
the film biz were used to support these losses in other divisions etc.
This is pretty well admitted and described in their annual 10-K and 10-Q
SEC filings etc.

This is also the reason Kodak stock has tanked (among other issues with
management, economy and so on). The big profits at Kodak were in the
processing and prints and film sales. But average film sales were only 4
rolls per USA household, not enough to support large losses in an
expanding digital market, and that drops to 1 roll per household in China
etc. As film sales dropped 17% last year in USA market, that also kills a
large fraction of their profits from related chemistry and print
processing on kodak papers.

Kodak isn't a big player in the one area of rapid growth in film sales,
which is one time use cameras (disposables) which is dominated by Agfa and
other niche players in the USA market anyway.

So we have a lot of existing capacity in film factories, with more coming
online in china and elsewhere, with a rapidly declining demand. Net result
is falling prices prediction - and confirmed by Kodak's marketing plan
announcements to try and maintain and even expand market share in the
declining film sales market by reducing prices etc.

regards bobm
--
************************************************** *********************
* Robert Monaghan POB 752182 Southern Methodist Univ. Dallas Tx 75275 *
********************Standard Disclaimers Apply*************************

On 28 Sep 2004 18:09:46 -0500, (Bob Monaghan)
wrote:

Just two things...
....

The marginal profits for film even at discounted prices are still huge.
the price to manufacture a roll of film is in the pennies a roll range (as
in Kodak's example of costs of fifteen cents to make a disposable camera
in China with a roll of film in it versus $1 cost in USA).

Browning's page on making Dye Transfer Matrix film shows costs of
about $0.53 / roll US for film. That is without anti halation
coating, a 120 spool or the expensive printed backing paper (printing
is expensive and the opaque coated paper is a premium item). As he
says that most of the cost is silver, a commodity item, that puts the
cost of silver in a roll of film at over a quarter.

Since that doesn't agree with the statement of a few pennies a roll,
or a penny a roll, I need a reference.

....

In short, the film supply will remain large (maybe larger than now, given
China's expanding production for domestic/foreign sales), and demand is
falling (17% per year most recently). Hence, econ 101, prices have to
fall. ;-)

....

If you look at the cost volume and price volume curves in an Economics
textbook you will see that the opposite is shown. With the exception
of the fire sale to close out the inventory, when the market declines
the price goes up. Granted, the examples in economic text books are
over simplified for purposes of teaching, but the general rule holds
true.