You could argue that Kodak is horrible at business (lots of people do). But things always seem to somewhat work out for the film company.
Founded in 1888, Kodak’s claim to fame was creating the 1st easy-to-use consumer camera. Subsequently, it brought amateur photography to the masses.
A century later, George Eastman’s legacy dominated the film industry.
Its plastic cameras were the focal point of middle-class American fun. Hollywood had become reliant on its patented film formats. And “Kodaking” (much like “Googling”) made its way into everyday vernacular.
By 1981, Kodak was a Fortune 500 brand with annual sales surpassing $10B and profit margins as high as 80% on its best-selling products. (For context, “good profit margins” is generally considered 20% for goods; 10% is average.)
Then, the brand’s fortunes turned. And for the next 30 years, a series of poor business decisions would send the camera company slowly backsliding into bankruptcy.
Kodak filed for Chapter 11 in 2012. Largely to blame is its leadership’s failure to embrace modern times.
Steve Sasson, the company’s most famous employee, started his digital imaging research in 1975. Almost 15 years later, his team had perfected the world’s 1st digital consumer camera. Management decided not to commercialize it.
Why? “Accustomed to the very high film margins, the company tried to protect its existing cash flow rather than look at what the market wanted,” a Wharton research paper speculates.
Less than 5 years later, competitors like Sony and Canon launched their own digital cameras. And Kodak only reluctantly entered the race in 1993 when consumer interest shuttered away from film photography, and it could not increase demand for these products.
Still, the brand remained steadfast on the notion that film was the brand’s future. After all, the product’s profit margins remained high, despite its rapidly declining market share.
So, even with digital cameras on the market, the brand would spend the next decade defunding related research – classifying these projects as expensive and risky.
By 2001, digital cameras had largely replaced film options (once its primary money maker, consumer film accounted for only 25% of Kodak’s sales that year). Meanwhile, Kodak had officially failed to make its new cameras profitable (the brand lost $60 on every digital camera sold).
Smaller strategic missteps only further cemented the company’s fate.
Take 1994, for example. The company launches its 1st economy-brand camera, Kodak Funtime. But then quickly worried the low-cost option would cannibalize its more mainstream (and profitable) film offerings.
So, they limited Funtime film sales to spring and fall – making the product line unavailable during peak summer and holiday buying seasons.
This, of course, backfired. Rather than waiting for “Funtime season,” Kodak customers substituted their Gold Plus film purchases with cheaper products – even if that meant shopping a competitor.
Inevitably, Kodak sunsetted its Funtime film products, attempting to protect its higher-margin product lines. But the damage was done.
The camera company would rebrand to a pharmaceutical company in 2019. But despite seeing some success with the strategy, Kodak reported only $182m in profits that year, well below its 1981 heyday.
Kodak earned its reputation as an innovation giant, holding 20k+ US patents at one point in time. But rather than becoming a technological trendsetter, the camera company – intentionally or not – made nostalgia its business.
Mind you, the camera and its film were just the physical product to which executives could set a price. That tangible reminder of how things were (or at least, the posed versions that resemble what we wish they were), that’s what people were actually buying.
And this excessive nostalgia would be the company’s downfall. The unwillingness to be anything but what we remember it was, especially in executives’ eyes. Because of this, Kodak was always destined to get stuck in the past.
“The film market peaked in 2003,” Manny Almedia, president of Fujifilm’s imaging division, told Time magazine. Throughout the following decade, sales declined, and once-popular camera models were discontinued.
Yet, Kodak was the last to stop selling many of its film options. (Kodak didn’t take its Ektachrome off the market until 2013.)
Since then, there have been headlines highlighting Kodak’s screw-ups. These stories almost always end with “but they’re trying again,” something related back to film and a haphazard attempt to paint its former glory.
“Anytime people hear about Kodak coming back, they think it’s coming back to be the Kodak it was when they were a kid,” Steve Sasson told The Atlantic.
“I don’t foresee that,” he concludes.
This conversation, however, took place near the beginning of the pandemic. And it couldn’t have anticipated how people, after 2 years in solitude, would grasp at anything resembling what it was like “before.”
In times of uncertainty, we crave familiarity. And for Americans, what’s more familiar than a Kodak moment?
Pandemic popular culture is partially to thank for this reminder.
Roughly 50% of Euphoria season 2 was shot on a Kodak Ektachrome. (Euphoria is HBO’s most-watched show since Game of Thrones, with 16.3m viewers tuning into its 2nd season, which aired in 2020.)
When the show decided to shoot on an Ektachrome camera, the 35mm film was still discontinued. So, its cinematographer, Marcel Rév, reached out to Kodak, asking if they could manufacture the product again, promising to shoot enough film to “make it worth it.”
Once the season aired, Marcel more than delivered on his promise. Kodak saw an unanticipated spike in consumer demand as the show’s viewers picked up film photography.
Celebrities like Taylor Swift, Kendall Jenner, and Cole Sprouse shooting on film (even if they weren’t Kodak cameras) have only added to this heightening consumer interest.
Kodak has doubled down on its film manufacturing department to meet demand.
“Over the last 18 months, [Kodak has] hired over 300 people, and we’re looking to hire more,” Nagraj Bokinkere, VP of Film Manufacturing, said in a recent interview.
Call me a skeptic, but no – probably not.
“Kodak’s history shows that innovation alone isn’t enough; companies must also have a clear business strategy that can adapt to changing times,” the Wharton report later reads.
But the camera brand is no longer making milestone innovations in film photography. And even if it was, strategy has never been the business’ strength.
Perhaps I am being unfair and projecting other brands’ pandemic failures on Kodak.
For example, Shopify laid off 10% of its workforce, admitting it was “wrong” to assume the ecommerce boom would continue at the same rate.
Peloton has only 6 months of runway to prove it’s a viable company after seeing 172% growth during the pandemic. And big box stores like Target and Walmart are missing Wall Street expectations due to excess inventory and overstaffing.
But if the pandemic taught us anything: These unprecedented times won’t last forever. Yet, Kodak is once again hiring as if they will.
There is, of course, always the chance I am wrong. After all, film photography never completely went out of fashion with artists. But the everyday consumer is Kodak’s target audience.
And the strategy that got the company to this point was “to be the last company standing in color films, both consumer and motion picture,” per Nagraj. While paying dividends today, this strategy – if we’re calling it that – leaves much to be desired tomorrow.
What happens when consumers, returning to a “new normal,” want to move on from pandemic interests? Or, if this trend lasts, what will Kodak do when competition inevitably increases? I can’t imagine the “survive until winter is over” business strategy will work in either scenario.
I’ll leave you with this: When Rochester, NY-born journalist Kaitlyn Tiffany revisited the Kodak campus during the pandemic, she wrote:
“"When the company was in its prime, as many as 2,000 people worked in the building [I visited]. It was built in 1969, and the vacant reception area has a mid-century-modern look; it seems sort of hip but is perhaps only authentically outdated."
Today, Kodak is modernizing that building for its pharmaceutical business. But unless the brand can reimagine its photography products for modern times, that will likely be how people talk about the dusty Kodak cameras they bought during their “pandemic film photography” phase.
Sort of hip. But perhaps only authentically outdated.