Industry Figures: Digital Print Behavior Defies Expectations

By Greg Scoblete On Jan 5 2006 - 8:00am

One pillar of the photo industry's conventional wisdom held that as more “mass market” consumers adopted digital photography, printing would increase. Unlike the “early adopters” comfortable with e-mail and the PC, these late comers would prefer the familiar trappings of prints and albums and help bolster the industry's sagging print volumes.

According to industry figures, it appears the converse is occurring, that the early adopters were in fact the high-water mark of photo printing activity and the mass-market customers are more reluctant to turn pixels to prints.

The number of digital images printed as a percentage of those captured has fluctuated since 2003, said Ed Lee, digital photography analyst, InfoTrends Research Group. “Between 2003 and 2005, we've seen the percentage run between 26 percent and 31 percent” of digital photos turned to prints, Lee said. That leaves the overwhelming majority of digital images residing unprofitably on hard drives, CDs or memory cards.

According to the Photo Marketing Association's (PMA) market research director Dimitrios Delis, 26 percent of all digital images were printed in 2004. But Delis cautioned that consumers frequently make multiple prints of a single image, which the association didn't track.

“There is not a clear trend that the percentage of digital pictures printed is dropping. What we do see dropping is the average number of digital photos being captured. This is driving the drop in the number of photos being printed,” Lee said.

Mainstream and late-adopter digital camera owners report taking only 31 and 22 photos per month, respectively, compared to early adopters who still take about 60 photos per month, Lee said.

According to InfoTrends, digital camera owners made roughly 12 prints per month in 2003, 11 per month in 2004 and 9 per month in 2005.

“As the share of mainstream and late adopting digital camera owners grows, the average number of images captured is expected to drop, so the average number of prints will fall as well,” Lee said.

The overall volume of digital prints has steadily increased, reflecting an increase in digital camera ownership. But newer digital cameras owners are printing less frequently than early adopters. When counting both film and digital prints, overall print volume has declined steadily since 2000, with the rise in digital prints unable to offset the erosion in film.

PMA is predicting print volume to reach 26.1 billion in 2005, down from 27.8 billion in 2004. Of those 26 billion prints made this year, 7.9 billion will be digital prints. 2006 will see a further decline, with PMA estimating 25.5 billion prints made, of which 10.8 billion will be digital prints.

Lee added that if consumers embraced “soft display” technology — viewing images on televisions, monitors and mobile phones — digital printing could decline further.

The numbers point to the underlying shift in consumer behavior engendered by digital imaging. “People are printing if they have a use for an image. They're not printing for the sake of printing,” Lee said.

“There is no fundamental reason for them to print,” Delis said.

Others are only printing if someone specifically asks them for an image, Lee said. He labeled this user segment “print on demand” and noted that they already made up about 18 percent of the market in 2004 and 26 percent in 2005. “People are printing if they have use for an image, in a scrapbook or album.”

Not only are new camera owners taking fewer pictures, there may not be as many digital camera owners as there were film camera owners. According to PMA, 84 percent of U.S. households owned a film camera in 1999. Digital cameras are projected to reach only 62 percent of U.S. households at their peak, according to IDC.

With sagging print volumes and the potential outlook of fewer prints to come, retailers have to think “beyond the 4 by 6,” Lee said. Larger size prints bring in more revenue, as do creative photo products like calendars and photo books, he added.

Delis also pointed to several macroeconomic factors responsible for the downward slope. High print volumes in the film era were in part the result of low-cost doubles popularized by mass retail chains. Favorable economic trends helped too, as they encouraged vacations and other photo-oriented activities. “We were operating at a very high capacity in this business to begin with,” he noted.

One other pillar of conventional wisdom that has been born out is a marked shift toward retail printing. Within the universe of digital printing, home printing still dominates as the method of choice, but its share is declining relative to retail and Internet alternatives. According to PMA, home printing accounted for 48 percent of the digital printing market vs. roughly 37 percent for retail. Within the retail market, 16 percent of digital prints were made on a kiosk and 21 percent were produced on a retail minilab. Online ordering — both mail order and net-to-store — saw comparative gains in 2005 as well.

The largest growth market in digital printing is online ordering, PMA reported, with a 195 percent growth over 2004 usage. Retail mini-lab usage also grew briskly, rising 141 percent over 2004. Home printing grew the slowest, at 27 percent.

Printing, PMA observed in a recent study, is not a “zero sum” or winner-take-all game. “Most of the consumers that print at home will also make prints at retail and vice versa,” the study noted.

Harry Loyle, CEO of specialty chain MotoPhoto, notes that demographics may be working against the industry. “We look at Gen X and Gen Y customers who are used to “soft displays” and other ways of enjoying their photos other than printing, and we have to ask ourselves how we're going to attract them.”

“Everyone's looking to the future,” Delis said. “Digital printing just hasn't compensated for film losses.”