For the first nine months last year the camera market was showing some signs of modest growth. This led to some optimism that the worst was over and that the camera makers could begin to move forward with some market stability on the horizon. Over the past 5 months this trend has stalled and now some signs of camera market erosion are once again evident. Should this negative trend continue it appears prudent that we should prepare ourselves for less selection and higher prices when it comes to camera gear.
Rather than inundate readers with charts and graphs about the camera market I thought I’d provide you with some links to statistics prepared by the Camera & Imaging Products Association. In my mind, to make better buying decisions, each of needs to have relevant information readily available.
Many of you will decide to use the links provided and take a look at the CIPA reports. When you do what you’ll discover are some interesting trends. For example, the shipments of fixed lens cameras have taken a serious hit for the first couple of months in 2018 i.e. down approximately 35% (January) and 45% (February) month-over-month when compared to 2017. This follows a trend of declining shipments of fixed lens cameras that began in October 2017. The cancellation of the DL series of cameras appears to have been a prudent decision by Nikon.
The interchangeable lens camera market is in comparatively better shape with more modest declines of 19.4% in January and a 5.4% decline in February. Shipments of interchangeable lenses were down 9.5% in January, then rebounded slightly with a 2% increase in February.
As the camera market continues to erode, it makes logical sense that camera manufacturers will need to make some tough decisions about their product portfolios. They will need to be focused on profitable models to ensure that they can generate contribution margin on everything that they sell. Marketing will need to become more efficient, as will inventory management. In the future it will be suicidal for a manufacturer to pump units out into the market, book initial profits, then have to blow out inventory at fire sale prices later on.
All of this could very well lead to models being quietly allowed to fade away without a newer generation replacement, or being cancelled outright. For example, we have seen the Nikon 1 AW model quietly disappear and the V3 now noted as discontinued with no replacement announced to date. In an article 18 months ago, Potential Price Shocks Ahead, I suggested the AW series would disappear and I put a question mark on the future of the V3.
Given the continued volume erosion of the camera market we will likely see more cost pressures on camera and lens manufacturers as their unit volumes contract. Quite simply they will need to sell each unit at a higher contribution margin in order to reach their break-even points on specific models as they sell fewer units. This will mean higher consumer prices and a potential reduction in the number of camera models offered by manufacturers.
In that article 18 months ago I made a prediction that, due to eroding market demand, camera manufacturers would need to raise their prices in order to generate sufficient contribution margin to remain profitable. We have seen some early examples of those price hikes with cameras like the Panasonic GH4 going from about $1,600 to $2,000 with the GH5 and the Olympus OM-D E-M1 going from $1,400 to $2,000 with its newer version. I see no logical reason why we should not expect this trend to continue with many manufacturers, and potentially accelerate moving forward.
Some manufacturers have announced initiatives to cut their fixed costs by closing manufacturing facilities. For example Nikon is closing a factory in China. This makes sense given camera market conditions and we may see additional consolidation by various manufacturers in the future.
We may also see more manufacturers try to more fully integrate their supply chains in an attempt to cut or reduce their reliance on components made by competitors.
The camera market press is also reporting on the prospects of both Nikon and Canon introducing new full frame mirrorless cameras, possibly as early as the back half of 2018. As these manufacturers make the move into more mirrorless products it will put added cost pressure on other existing products in their portfolios as some cannibalization of those existing unit volumes is likely.
All of these factors are weighing heavily on many photographers who are not sure what to do in terms of upgrading some of their gear or expanding their kit.
They are asking themselves all kinds of important questions: If I go full frame mirrorless with Nikon or Canon will I be able to use any of my existing lenses in some fashion? What will my existing gear be worth once those new cameras come out? Is it time to switch my system over to a different manufacturer and/or format? Should I stick with the camera system that I have now and ‘future proof’ it as best I can with some additional components? Should I look for good quality used gear to augment my system?
There is no right or wrong answer, as each photographer must evaluate their personal situation. I did that about 3 years ago when I decided to shoot exclusively with the Nikon 1 system, add some additional bodies/lenses to my Nikon 1 kit, and sell all of my full frame DSLR gear. What I currently have should keep me operating for the next 3-5 years. After that I’ll need to re-evaluate.
The only certainty that I see for the immediate future is that new camera gear will be getting more expensive. I also think it is very likely that we will see fewer camera models in the future. Like the famous scene in Indiana Jones and the Last Crusade, all each of us can try to do is “Choose wisely.”
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