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Mirrorless CSCs Provide Growth In Difficult Q1

6/16/2013 08:00:00 PM Eastern

NEW YORK — Between a sustained economic downturn and the new smartphone revolution, it’s been a tough year for digital camera sales, but industry watchers said the new mirrorless compact system camera (CSC) category continues to be one of industry’s most promising growth segments.

“We’re seeing year-over-year growth in the first quarter of [2013] for mirrorless, even as the total market shrank almost 30 percent,” said Chris Chute, IDC worldwide digital imaging research director.

Ben Arnold, The NPD Group’s industry analysis director, said sales of mirrorless CSCs were up about 13 percent in units during the first quarter of 2013 from the same period a year ago.

“This is a slower rate of growth than we saw throughout 2012, but as this segment becomes a larger piece of DSLR — unit share of mirrorless as a piece of total DSLR was up to 15 percent in Q1 — growth factors for the segment are likely to be a little more normalized,” Arnold said. “That said, 13 percent growth in the imaging category is a story and presents a continued opportunity.”

Chute added: “Time will tell if the rest of 2013 will see continued segment-based growth. That will be largely up to how well camera vendors are able to create demand in this very mature market.”

To maintain the moment, Arnold said, “the camera industry needs to market the lifestyle advantages of having a premium camera as opposed to the techs and specs that many consumers don’t understand or don’t care about.”

“I would also say that as mobile and digital sharing and metadata like GPS tags become a bigger part of a photo’s digital life, the connection between photo taking on premium devices and the methods for sharing photos online and socially should be stronger.

“The smartphone shouldn’t have the monopoly on how photos travel through one’s digital community.”

Still, consumers remain intrigued by the advanced image capture capability offered by interchangeable-lens cameras, and the compact size and reduced weight of a mirrorless CSC is convincing serious photography buffs to step up from an iPhone or simple point-and-shoot camera.

Interestingly, major DSLR camera manufacturers observing the trend have also started reducing the size and weight more and more on their entry and midrange standard DSLR models as well, making for a more confusing choice.

“The camera market is quickly evolving towards specialization,” Chute observed. “Long optical zoom and interchangeable-lens cameras are providing the value consumers are looking for in a stand-alone device.”

Chute said that U.S. consumers aren’t necessarily interested in one vs. the other. “They’re looking to be able to take great pictures,” he said, adding, “It’s become clear that the mirrorless segment is appealing mostly to enthusiasts and prosumer photographers who appreciate the value that mirrorless brings to the table.”

But Arnold added that with unit growth rates in the teens, the segment is drawing from camera newbies as well. “I think the perception is mirrorless is a more userfriendly and design-friendly DSLR,” he said, adding, “I think the ultimate deciding factor in choosing between a smaller DSLR and a mirrorless is the price relative to the perceived value of the features.”

Demographically speaking, Arnold has spotted a shift in buyer profiles.

“In the past year, DSLR purchasers have trended less affluent — 32 percent of buyers have incomes below $50,000. Last year, 26 percent had incomes under $50,000. That’s probably the most important shift, and it’s in line with DSLR gaining in popularity, availability and affordability. I would probably attribute some of this to lower cost, higher featured mirrorless, too.”

In somewhat of a surprise, the top brands in the mirrorless CSC category are Sony and Nikon, according to NPD market research. Collectively, the two brands make up two-thirds of the U.S. category sales.

“This is down from a year ago when the two accounted for 74 percent of the market,” Arnold said. “As with any new market, however, sales have grown for both brands, so their declining share isn’t indicative of falling sales but rather a growing market and longer list of competitors. Neither’s sales have declined year over year.”

Canon, which has been a top market share leader in most U.S. camera categories, jumped into the mirrorless CSC segment last summer. But consumers didn’t exactly throw away their old equipment in celebration.

“The Canon EOS-M did not create the dramatic market impact many thought it would,” Chute pointed out. “If anything, we saw Nikon’s share in mirrorless increase in 2012, and Sony gained share too.”

This, perhaps, explains why Canon has been among the leaders in advancing compact DSLR offerings.

Among the other players, Arnold said, “Pentax is a brand that while only at 4 percent share gained a fair amount of the market in a brief amount of time. They had less than 1 percent share in Q1 2012 and have grown steadily since.”

Meanwhile, as DSLRs have become more popular and more affordable, traditional mass-merchant and electronics retailers have become more vital to category distribution, Arnold observed.

“The DSLR market as a whole is growing, and retail’s share of the market stands at over half — likely a result of the DSLR’s rising appeal among consumers.

“Photo specialty too remains important and while that channel’s share of sales has fallen slightly — just 2 percentage points in the 12 months ending in April year over year — sales are up,” he said.

Despite the growth, neither CSCs nor DSLRs are likely to make up for the shortfalls in the entry point-andshoot camera business.

“I think greater mass appeal only comes when mirrorless becomes more affordable,” noted Arnold. “That’s clearly the path, however, given the declines in point and shoot. Right now [average selling prices] are above $500 for mirrorless, which feel a little high for mass adoption to take place. A real possibility is cannibalization of traditional DSLR by mirrorless as non-enthusiast consumers view the features and value as good enough.”