The long standing uncertainty over the future of 35mm motion picture film was finally laid to rest this past week by the Eastman Kodak Co. causing the industry to heave a huge sigh of relief. That’s one way to look at the company’s announcement of an agreement with what the Wall Street Journal referred to as a “coalition of studios” for the guaranteed purchase of set quantities of film stock over the next several years. Another way to see the news is as a temporary stay of execution for the medium.
Whether the stay will turn into a permanent reprieve for film depends on many factors not the least of which are the length of the deal, the amount of film stock being manufactured and the continued creative preference of filmmakers. More importantly, it hinges on whether Kodak changes the strategy and approach of its historic motion picture business. If recent maneuvers are any indication, there may be some hope, however slim. Let me explain.
Mandatory Prerequisite Background
No story about the current state of the Eastman Kodak Co. or its future potential would be complete without reviewing the company’s last several years, specifically the time period leading up to and after January 19, 2012. That was the date the 124-year-old company filed for Chapter 11 bankruptcy protection. The adoption of digital imaging and photography both in the consumer and commercial markets devastated Kodak which wasn’t able to modify its business and product lines fast enough. The recent announcement about motion picture film stock finally gives us a little glimpse into the financial damage the company suffered during the transition to digital cinema.
According to Jeff Clarke, who took over as the CEO of Kodak this past March, the sale of motion picture film declined from 12.4 billion linear feet in 2006 to 449 million feet last year. You don’t need a degree from a fancy business school to know that a 96% decrease in revenue is a bad thing. The sale of film stock, once a profitable cash cow for the company, now accounts for under 10% of Kodak’s USD $2.2 billion annual revenue.
Since 2003 Kodak laid off 47,000 employees (and stand at around 8,500), closed 13 manufacturing plants along with 130 processing labs. The industry as a whole went from 260 motion picture laboratories capable of handling film in 2011 to 111 last year. As certain studios ceased the distribution of their releases on 35mm even giants such as Deluxe shuttered their film operations in the United Kingdom and United States, auctioning off their analog lab equipment.
This year Clarke reports Kodak will likely lose money manufacturing motion picture film and hopes to break even in 2015.
Examining The Past To Predict The Future
Much has been written over the past few years about how Kodak wound up in such dire straits despite having survived more than a century as one of the most widely recognized and dominant brands in the world. Most news stories focused on the company’s slow response to the transition toward digital photography. Though this may be true, Kodak may have avoided its financial difficulties if it had spent more time studying not only its own past, but also that of photographic technology which has never remained static for long.