Digital Camera Growth Seen Slowing in 2005

The photography industry expects U.S. digital camera sales growth to slow to about 13 percent this year, as the market matures after growing at a breakneck pace for almost a decade, according to a report released Thursday.

Unit sales of digital cameras, which use no traditional film and record images on a memory chip, will rise to 20.5 million this year from an estimated 18.2 million in 2004, industry trade group Photo Marketing Association (search) said in its annual photography industry report.

The increase pales beside the rapid gains of more than 30 percent in each of the last three years.

"Digital cameras are expected to continue their growth in 2006 before reaching their peak at the end of that year or the next," PMA said. "As the digital camera market matures, industry revenue will increasingly depend on accessories, consumables and services."

The rapid transition to digital photography has forced companies like No. 1 film maker Eastman Kodak Co. (EK) to shift their business strategy away from film. It also hurt the retail photo developers where most consumers took film to be turned into prints, although use of retail printing is rising.

The overall camera market, including film-based models, is expected to be flat in 2005, after growing by 3 percent in 2004.

Total film sales are expected to fall 18 percent in 2005 to 532 million rolls, after sliding 19 percent last year. Sales of of single-use cameras — which are also called "disposable" and are counted as rolls of film — are expected to slip to 217 million in 2005 from 218 million.

PMA also said that more consumers are printing digital photos at local shops like pharmacy chain Walgreen Co. (WAG) and Wal-Mart Stores Inc. (WMT), but the majority still develop their snapshots at home,

Some 40 percent of the 7.7 billion digital images printed in the United States this year will be made at retail stores, up from 31 percent in 2004. By contrast, 18.2 million traditional film prints will be made in 2005, down 18 percent from last year.

Printing of digital pictures at home will shrink to 52 percent in 2005 from 61 percent in 2004. Online photo developers are seen staying at about 8 percent, the study said.

Digital snapshots can be e-mailed, viewed on a computer or television, stored on a computer or deleted. Most are never printed.

The group came up with its projections after surveying retailers and about 10,000 households.