- Why inbuilt swamped while interchangeable was afloat?
- How Canon relatively performed better than Nikon?
- Is 2017 a turnaround year?
The global digital photography market comprises cameras, lenses, software and processing equipment. This stood at approx. $78 billion (2015) and is expected to reach around $111 billion (by 2021 according to Zion Market Research). The Japanese players such as Canon and Nikon dominate the digital camera industry, these are closely followed by Sony, Olympus, Ricoh, etc.
The digital camera was first launched in 1999 and soon surpassed the demand for film cameras as shown in the below graph. The sale of film cameras almost became negligible by 2008, while the sale of digital cameras was at its peak. However, with the evolution of smartphones and tablets, the sale figures in the entire digital camera industry plummeted drastically, this was more for the cameras with inbuilt lenses (compact cameras). The shipments for cameras which were at its peak in 2010 (121.4 million units), thereafter, fell continuously and reached the lowest (24.2 million units) in 2016.


Furthermore, digital cameras can be classified into two categories; inbuilt lens camera and interchangeable lens camera. Although, overall the camera sales have declined, the shipments for interchangeable camera lens did not witness a drastic downfall (as shown in the graph below). It is in fact expected to keep the market alive through the easy provision of high-quality images. Moreover, the popularity of wildlife and fashion photography are the key factors that may keep the demand for interchangeable lens cameras steady. The growing prevalence of social media platforms like Instagram, Facebook and Twitter and their easy access through smartphones are steering the digital photography market. However, considering the fact that smartphones users are more inclined towards photography, their behaviour might get converted into a purchase of digitally advanced cameras in the future. In addition, the element that once a camera is purchased, thereafter, it would result in buying of advanced lenses, has led the players to introduce a variety of lenses.

Televisory examined the impact of recent trends on revenue of the two major players in the industry, Canon and Nikon, and found that the revenue for Canon fell by 31% in the past 6 years, while the revenue for Nikon came down by 9%. Canon which has been the market leader in terms of the market share faced a major dent in its revenues but continue to lead the market. The decline was majorly led by a perpetual contraction of the market for compact cameras. Additionally, the appreciation of the Japanese Yen against the Euro and the US Dollar was another factor which contributed to the shrinking revenues in 2016. Hence, this led to a negative impact of over ¥100 billion in net sales for Canon. However, contrary to the market trend, Nikon’s relatively strong sales of high-value-added products with ultra-high zoom feature in the compact camera segment worked for the firm. In addition, Nikon has been launching newer models at a faster pace than compared to Canon and this strategy proved successful for the company.

Notably, Nikon’s direct costs were higher than Canon’s, this yielded higher gross margin for Canon, but its other operating expenses were way less than that of Canon’s (as shown in below graphs). The drop-in Canon’s EBITDA margin was higher as compared to its gross margin since its R&D and administrative expenses were ¥38.9 billion and ¥152 billion more than that of Nikon’s. Moreover, Canon’s depreciation expenses were c. 2.0x of Nikon’s, thus, resulting in a lower EBIT margin. The major reason for such high costs for Canon was large scale operations and therefore, the requirement of a big asset base and other resources to support such capacities. Further, both Canon and Nikon had low-interest payments as they had low dependence on debt. Their debt to equity ratio (average of last 3 years) was 0.07 and 0.21 respectively. Thus, the primary reason for the decline in their net margins was the currency effect (¥107 billion for Canon), restructuring and environment expenses (¥4.5 billion for Nikon).


The players in the industry are spending more on the R&D and launching novel and innovative products to keep the market afloat as this is shrinking. The features such as Wi-Fi, Bluetooth, sim card slots, image sharing through smart devices and user-friendly interfaces are now vastly available on digital cameras to attract customers. Likewise, companies are focusing on emerging markets in Latin America, Africa and Asia due to saturation in the developed economies. There is more stress on marketing and promotional activities to gain a competitive edge in these economies. The steps undertaken by Canon and Nikon in the past 5 years to sustain in the market are summarized below:

In conclusion, it can be mentioned that while Canon and Nikon rule the DSLR market, there are others like Sony and Olympus, which repositioned their resources for mirror less cameras. The sales for mirror less cameras increased in the market by around 17% (2015), while Sony’s sales in this segment shot up by almost 66%. The proportion of mirror less cameras increased from 9% (2015) to 13% (2016) in the overall camera market. Although, Sony is far behind from Canon and Nikon in the market share, it is increasing its R&D expenditure and challenging both the firms with its unconventional cameras.
CIPA in its 2017 outlook predicted a decline of 10.3% in the shipments (considering the shift in the market), but, on the contrary, there has been a rise in shipments. A comparison of the half yearly results for last three years (Jan-June) showed that shipments in 2017 improved in relation to 2016, especially in the months of May and June by 34.2% and 36.3% (shown in the below chart). This implies that the slump in sales for cameras is nearing an end owing to the persistent efforts of the players as stated above.

Although there is an improvement in sales (2017) but a comparison of the current statistics with numbers in 2012 show that the sale for fixed lens cameras declined a massive 84% and interchangeable lens camera fell by approx. 38%. Hence, the players have a long way to go as each has a small share of the market, in terms of the volume as compared to the earlier time. However, it seems that these companies did identify that high-tech products with a continuous innovation are the key to get digital cameras and industry back on the track.
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