Photo Studios and Commercial Photography
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Industry Overview
The photographic services industry in the US includes about 14,000 companies with combined annual revenue of $7 billion. Large companies include CPI Corp, Lifetouch, and Olan Mills portrait studios, and Getty Images and Corbis commercial services. The portrait studio segment is concentrated with the four largest companies holding a third of the market. The commercial segment is highly fragmented: the top 50 companies hold less than a quarter of the market. While a few companies have annual revenue well over $100 million, most are small, with revenue under $500,000.
The transition from film-based imagery to digital photography and the associated technologies now available to the industry and its consumer base have revolutionized the industry in recent years.
Competitive Landscape
Demand is closely tied to consumer income and corporate marketing activity. The profitability of individual companies depends heavily on effective marketing. Large companies have economies of scale in marketing and production. Small companies can compete effectively by offering specialized services or holding favorable locations. The industry is labor-intensive: average annual revenue per worker is $75,000 for portrait studios, $120,000 for commercial firms.
Products, Operations & Technology
Major products are family portraits and images for corporate advertising and marketing materials. Portrait studios account for 70 percent of industry revenue. Peripheral sales (frames, albums, and related products) make up less than 5 percent of total revenues.
Family portrait companies specialize in just one segment of the industry, while many commercial firms also produce family portraits in addition to commercial work. In the commercial segment, most companies work on assignment to produce original photographs, and a few large firms like Getty and Corbis license photographs they buy from outside sources.
Studio operations generally require 300 to 1,000 square feet, but studios with multiple camera setups may be larger. Larger studios may have their own processing lab, but most send their images to an independent central laboratory that has high speed, cost-effective image processing equipment. Digital photographers can circumvent laboratory processing by submitting images (proofs) to customers on CDs, although many still create hard-copy proofs. The shift to digital images creates a level playing field for the small studio because high volume studios receive discounts from processing labs.
Commercial photographers may operate an indoor studio but also often work onsite. In addition to providing original digital images, services may include pre-production work such as image processing, brochure design and layout, and image archiving. Commercial work is usually in close cooperation with the corporate customer, an advertising agency, or a commercial printer.
Photo studios (and their service labs) now compete with their customers for certain services. Photos can be printed by customers with a photo printer and distributed via the Internet, completely eliminating the traditional photo print.
Advances in the ability to manipulate the “as taken” photograph allow both image and productivity enhancements. Photo shoots can take place in studios where previously they had to be done remotely to produce a true image complete with backgrounds. Images can now be substantially touched up and improved, with undesirable characteristics and blemishes removed.