Kodak no longer selling E100D directly to customers?

[MattKing]

What does the bankruptcy deal require them to do regarding film production for Alaris?

It is complex and the exact terms are confidential, and the agreement in place now reflects changes that were subsequently negotiated.

 

[BHuij]

What is also getting hard, are the accessories like slide frames. Nothing here, must be ordered from Germany. They are often sold out, and their price has doubled in just one year. There are only two brands available - Agfa CS-II style, plastic frames wit no glass by Reflecta and Kaiser.. Luckily, projector lamps and some other spare parts for projectors can still be bought - mostly from specialist shops in Germany.

At the risk of derailing this conversation a bit, the first place my brain went when you mentioned the slide frame shortage was 3D printing. If you're doing bulk amounts of slides, a 3D printer might not keep up, but these look extremely easy and extremely inexpensive to print yourself, even on a $100USD entry-level machine. Worth considering.

 

[Alan Edward Klein]

It is complex and the exact terms are confidential, and the agreement in place now reflects changes that were subsequently negotiated.

I assume the new owners of Alaris knew what those terms were before they bought the company. Those terms have to lock Eastman into perpetually producing film for Alaris. Eastman can't arbitrarily stop producing film or specific emulsions except for certain conditions. The questions are what are those conditions and what are the terms for markups? I can't imagine the new owners would get themselves into a situation where they were at the mercy of Eastman.

 

[MattKing]

Eastman Kodak has an important division that makes photographic still film, photographic motion picture film, plus several other products that have nothing to do with photography or Kodak Alaris. Most of its business is elsewhere.
Eastman Kodak lacks the resources necessary to worldwide distribute and market the still film output from that division.
Kodak Alaris has all the marketing and distribution infrastructure, including worldwide all the knowledgeable employees critical to making that happen.
Without each other, we wouldn't have Kodak still film, and Eastman Kodak probably wouldn't be making movie film either.
They have interdependence.
So neither party is likely to want the agreement to end.

 

[koraks]

They have interdependence.
So neither party is likely to want the agreement to end.

@MattKing knows that him and I disagree on the bit above - that's to say, we disagree somewhat. I can get behind the 'interdependence' formulation, but I've come to realize that the position of Alaris at this point is a liability to Kodak. The exclusivity agreement with Alaris seriously hampers Eastman's access to the market for their still film products. We now get strong indications that this is starting to extend to motion picture products as well.

Adopting a very simple (admittedly) viewpoint of strategic analysis, Eastman has a range of virtually unique products for both cinematic and still film color photography, and the means to manufacture these, perform R&D / new product development, etc. What Alaris brings to the table is access to a distribution channel, and a contract that forbids Eastman to create a distribution channel of its own for a select range of products.

The value of a contract as a strategic asset is limited; in essence, the contract in this case is mostly a sign of impotence w.r.t. Alaris: Alaris does not have an asset of sufficient value to derive competitive advantage from, so it needs to secure its bargaining power towards Eastman through legal terms. Inherently, Alaris' position is weak.

But the critic will argue "What about Alaris' distribution channel and customer contacts, surely, those are a strategic asset." Yes, to an extent, but it's not an inimitable asset. The fact that Eastman has found ways (likely without even trying very hard) to distribute film to the still film market (CineStill, Flic and many others) demonstrates that setting up alternative distribution channels is very feasible within a relatively short amount of time.

I understand the argument of Alaris having control of logistics channels, having market intelligence and marketing & sales competence. However, this is where I disagree with Matt: I don't think these are as relevant as they were up to ca. 2003.
* Logistics are all managed in practice by 3rd parties. Eastman or any of its fledgling alternative distributors has the same easy access to these parties as anyone else. Alaris does not bring anything of particular value to the table in this regard.
* Market intelligence and sales force are relevant, for sure. But the reasoning that control over the market rests with Alaris ignores the fact that the market as such consists of players capable of autonomous action as well. If Alaris would shut its doors tomorrow, retailers would still want to sell Kodak film. They would knock on Eastman's door and demand being supplied with product. The challenge for Eastman would be a purely practical one, and consist of choices like hiring sales staff vs. selecting a small number of alternative distributors to handle the task for them (the latter would be the obvious choice and the beginnings of it are already in place).
* Marketing in terms of advertising etc. is likewise not an inimitable asset; the main asset of value here is the brand name 'Kodak', which Eastman has access to. Also, keep in mind that marketing and advertising are today of a different character than back in the 1990s, for two notable reasons: (1) online dynamics can be leveraged much more effectively by a relatively small staff, and (2) since there's no noteworthy competition, advertising as such is just no longer the differentiating factor in Kodak's market success.

The net effect is that Alaris is much more dependent on Eastman than the other way around. This unbalance creates tension in the relationship and sooner or later, that's going to cause cracks in it. I understand that Eastman has been too busy in the past years to remain afloat and regain its footing in the changed world of much reduced volumes. The introduction of E100D, the increased confectioning capacity, the toll manufacturing for Fuji etc. are all signs that Eastman has managed to nurse itself from a near-comatose state to an entity capable of a limited amount of growth and development.

Logically, the next step for Eastman from a strategic viewpoint will be to consolidate and improve profitability. The position of Alaris in this regard is becoming a liability, as it hampers Eastman in choosing opportune ways to approach the market with its products. The fact that Alaris and Eastman are not aligned w.r.t. marketing strategy speaks from the business on the side Eastman has initiated in the areas I mentioned. I think it's questionable that Eastman in the long run will tolerate the apparent legal pressure exerted on it by Alaris. While Eastman my be only a shadow of its former self, its strategic position in relation to Alaris is vastly superior to the latter. Any company will exploit this position - if only because its owners demand it. Eastman will have to go there, even if some of its employees might personally prefer to not rock the Alaris boat too much. For now, Alaris may be trying to create FUD within Eastman, but sooner or later Eastman will wake up to (and act on) the fact that the teeth of the Alaris wolf are false and that the animal itself is geriatric.

 

[lamerko]

Provia is around, but it is sporadic at best. Often with limitations like 3 rolls per order. I have bought some straight from Fuji, but at most of the time, all slide films are sold out. Our local dealers ask exorbitant prices like 28€ a roll of Provia. You can´t develop just one roll in two months, because E6 chemistry will not keep. Sending to a lab is not an option for me at least - it is not funny, and the results can be very bad. For most photofinishers, it is not viable to maintain a replenished minilab for E6 any more. Much more common is running some films through Jobo every two weeks, and often with old, expired chemistry, or some cheap 3-bath kit beginning by the letter C, bu people not very familiar with E6 process.

I would not complain for prices like 20-22€ a roll of slide film, but Ektachrome here is now 29.90 at the cheapest. Another store asks 35€, No Provia in the whole country of Lithuania since August, and Velvia 50 from 26€ upwards, with just some rolls available.

Indeed, availability of Provia is sporadic. But recently deliveries to German stores have been more regular. The price is impressive - €53.94 for a pack of five 120 (€10.80 each), while the 135 format is €22.98. Whether the costs of 35mm are really more than twice as much (I can't believe it) or just the demand for 35mm is high and they applied some kind of distorted market principle - I don't know. For me the price of 120 films is very good and I only buy from them. On the other hand, a 400" roll of Ektachrome 100 broken down into 36 frames comes in at a similar price. It would be a real shame to lose that option!

 

[Alan Edward Klein]

Eastman Kodak has an important division that makes photographic still film, photographic motion picture film, plus several other products that have nothing to do with photography or Kodak Alaris. Most of its business is elsewhere.
Eastman Kodak lacks the resources necessary to worldwide distribute and market the still film output from that division.
Kodak Alaris has all the marketing and distribution infrastructure, including worldwide all the knowledgeable employees critical to making that happen.
Without each other, we wouldn't have Kodak still film, and Eastman Kodak probably wouldn't be making movie film either.
They have interdependence.
So neither party is likely to want the agreement to end.

@MattKing knows that him and I disagree on the bit above - that's to say, we disagree somewhat. I can get behind the 'interdependence' formulation, but I've come to realize that the position of Alaris at this point is a liability to Kodak. The exclusivity agreement with Alaris seriously hampers Eastman's access to the market for their still film products. We now get strong indications that this is starting to extend to motion picture products as well.

Adopting a very simple (admittedly) viewpoint of strategic analysis, Eastman has a range of virtually unique products for both cinematic and still film color photography, and the means to manufacture these, perform R&D / new product development, etc. What Alaris brings to the table is access to a distribution channel, and a contract that forbids Eastman to create a distribution channel of its own for a select range of products.

The value of a contract as a strategic asset is limited; in essence, the contract in this case is mostly a sign of impotence w.r.t. Alaris: Alaris does not have an asset of sufficient value to derive competitive advantage from, so it needs to secure its bargaining power towards Eastman through legal terms. Inherently, Alaris' position is weak.

But the critic will argue "What about Alaris' distribution channel and customer contacts, surely, those are a strategic asset." Yes, to an extent, but it's not an inimitable asset. The fact that Eastman has found ways (likely without even trying very hard) to distribute film to the still film market (CineStill, Flic and many others) demonstrates that setting up alternative distribution channels is very feasible within a relatively short amount of time.

I understand the argument of Alaris having control of logistics channels, having market intelligence and marketing & sales competence. However, this is where I disagree with Matt: I don't think these are as relevant as they were up to ca. 2003.
* Logistics are all managed in practice by 3rd parties. Eastman or any of its fledgling alternative distributors has the same easy access to these parties as anyone else. Alaris does not bring anything of particular value to the table in this regard.
* Market intelligence and sales force are relevant, for sure. But the reasoning that control over the market rests with Alaris ignores the fact that the market as such consists of players capable of autonomous action as well. If Alaris would shut its doors tomorrow, retailers would still want to sell Kodak film. They would knock on Eastman's door and demand being supplied with product. The challenge for Eastman would be a purely practical one, and consist of choices like hiring sales staff vs. selecting a small number of alternative distributors to handle the task for them (the latter would be the obvious choice and the beginnings of it are already in place).
* Marketing in terms of advertising etc. is likewise not an inimitable asset; the main asset of value here is the brand name 'Kodak', which Eastman has access to. Also, keep in mind that marketing and advertising are today of a different character than back in the 1990s, for two notable reasons: (1) online dynamics can be leveraged much more effectively by a relatively small staff, and (2) since there's no noteworthy competition, advertising as such is just no longer the differentiating factor in Kodak's market success.

The net effect is that Alaris is much more dependent on Eastman than the other way around. This unbalance creates tension in the relationship and sooner or later, that's going to cause cracks in it. I understand that Eastman has been too busy in the past years to remain afloat and regain its footing in the changed world of much reduced volumes. The introduction of E100D, the increased confectioning capacity, the toll manufacturing for Fuji etc. are all signs that Eastman has managed to nurse itself from a near-comatose state to an entity capable of a limited amount of growth and development.

Logically, the next step for Eastman from a strategic viewpoint will be to consolidate and improve profitability. The position of Alaris in this regard is becoming a liability, as it hampers Eastman in choosing opportune ways to approach the market with its products. The fact that Alaris and Eastman are not aligned w.r.t. marketing strategy speaks from the business on the side Eastman has initiated in the areas I mentioned. I think it's questionable that Eastman in the long run will tolerate the apparent legal pressure exerted on it by Alaris. While Eastman my be only a shadow of its former self, its strategic position in relation to Alaris is vastly superior to the latter. Any company will exploit this position - if only because its owners demand it. Eastman will have to go there, even if some of its employees might personally prefer to not rock the Alaris boat too much. For now, Alaris may be trying to create FUD within Eastman, but sooner or later Eastman will wake up to (and act on) the fact that the teeth of the Alaris wolf are false and that the animal itself is geriatric.

The new owners of Alaris were certainly aware of all the legal agreements between the two parties before they bought Alaris. They had to feel secure enough otherwise they would not have bought Alaris. The elimination of Eastman selling E100D directly I'll bet was instigated by the new Alaris owners. I wouldn't put it past the new owners to have already approached Eastman to buy their film production facility so they have complete control of pricing. At a minimum, they will enforce whatever protections they have in the bankruptcy and subsequent agreements. No one is going to spend $100 million buying a company without having control of things.

 

[NortheastPhotographic]

They could be a bit more B2B. They won't sell to shops like me (KA not EK). If I wanted to buy a case of Portra 400, gotta deal with a distributor who takes their cut.

 

[OrientPoint]

Has anyone heard anything about Vision 3 500T (5219) or Eastman XX (5222) be affected by this policy, or is it only Ektachrome 100D (5294)? I use the 500T, when I need to push a color negative film, and sometimes I like the look of Eastman XX, in-place of the modern emulsions.

According to Kodak reps sale of any 35mm film requires approval now. They'll sell you as much or as little 8mm and 16mm film as you want, no questions asked, however. Seems pretty clear (to me at least) that they want to keep the still image and motion picture channels separate, and 35mm is where they meet. It's a bummer for people wanting to bulk load, but I can understand the business logic.

 

[koraks]

I wouldn't put it past the new owners to have already approached Eastman to buy their film production facility so they have complete control of pricing.

Hehe, yeah, nice one. If you ever have chance to set foot in a plant that manufactures photographic silver halide products, definitely grasp the opportunity. You'll understand.

In all likelihood, Kingswood purchased Alaris for a number of reasons; the film business is after all only part of Alaris' revenue streams. Kingswood moreover likely recognize that the exclusivity deal with EK will only generate finite rents for a finite period of time; i.e. they would have valued it for a certain revenue for a limited number of years, and not something that will generate rents in perpetuity.

And yes, Alaris will have to protect its interest and yes, I do agree that Kingswood in the background is a strong motivator (a very pressing one, in all likelihood) to do so. It's kind of difficult not to start digging if there's a guy standing behind you pointing a gun at your neck.

They could be a bit more B2B. They won't sell to shops like me (KA not EK). If I wanted to buy a case of Portra 400, gotta deal with a distributor who takes their cut.

That's what EK might (should?) have done. Instead, they appear to try to stop sales of cine film for still photography - except (as it seems now) to a select number of parties who confection it specifically for this market. Will we see the possibility of you and me buying a 400ft roll of E100D from Cinestill or Flic? I don't think so.

Seems pretty clear (to me at least) that they want to keep the still image and motion picture channels separate, and 35mm is where they meet. It's a bummer for people wanting to bulk load, but I can understand the business logic.

Yes, this appears the reason, and there the business logic can consist of a number of very plausible (likely) arguments that we've touched upon earlier in this thread. That they (EK) are doing this, is not very surprising. The way they are doing it, and for what reasons - well, that's a matter that can be debated. Whether EK (and its business partners) is doing itself a service from a strategic viewpoint - I find that hard to tell (or to believe, at this point).

 

[brbo]

According to Kodak reps sale of any 35mm film requires approval now. They'll sell you as much or as little 8mm and 16mm film as you want, no questions asked, however.

Of course, since that is something that was the base of KA - EK agreement from the start. EK handles all cine film by themselves.

The 35mm 100D embargo has nothing to do with EK not wanting to deal with small customers.

We will see if Alaris will also have the power to "persuade" EK to stop selling film to other bigger customers that repackage their still film (Lomography, Fuji, Flic...).

 

[OrientPoint]

The 35mm 100D embargo has nothing to do with EK not wanting to deal with small customers.

That is correct. They will sell you a single $40 roll of Super8 film direct. They just won't sell you 35mm. Pretty obvious what's going on (although clearly not obvious enough to prevent a 4 page thread on Photrio).

 

[Alan Edward Klein]

According to Kodak reps sale of any 35mm film requires approval now. They'll sell you as much or as little 8mm and 16mm film as you want, no questions asked, however. Seems pretty clear (to me at least) that they want to keep the still image and motion picture channels separate, and 35mm is where they meet. It's a bummer for people wanting to bulk load, but I can understand the business logic.

Eastman has a contract with certain Hollywood studios and producers to furnish a certain amount of feet of 35mm film every year for film productions. Eastman asked them for a contract to assure they would get a certain amount of sales and Hollywood wanted to be assured that Kodak would continue producing the film in the future rather than stopping production entirely.

 

[koraks]

Pretty obvious what's going on (although clearly not obvious enough to prevent a 4 page thread on Photrio).

The scope of the current limitation is fairly clear. What's not clear is why this is happening, who is behind it and whether the scope will change. Much of the 4 pages is about that subject matter.

 

[NortheastPhotographic]

Well it definitely exposes the various mark ups that are happening on film sold by Alaris. The price of E100D in 1000' is shockingly low compared to the packaged product sold by KA. Imagine how much P400 would cost if sold this way... I think I was selling it for $13.50 a roll and turning a good profit. KA wants $22. I know the packaging of the film drives the price up but there is a limit to how far that goes. I see no reason why it should cost more than P400 which is a little over $15 per. It just feels like they're saying...slide film should be more expensive so it must be. I am not one who believes film is hugely over priced these days, but E100 in 36 exposures definitely is.

 

[MattKing]

Making a 1000' roll of film is relatively inexpensive.
Converting that 1000' of film into 180 rolls of cassetted, frame numbered rolls of 135-36 film, packaging those rolls, and getting all those rolls into the hands of local distributors spread around the world costs a lot!

 

[Henning Serger]

They could be a bit more B2B. They won't sell to shops like me (KA not EK). If I wanted to buy a case of Portra 400, gotta deal with a distributor who takes their cut.

Here in Europe it is even worse:
Even the biggest European film shops which are selling ten-thousands of Kodak rolls p.a., are not allowed to buy at KA directly. They all have to buy at the wholesalers. To the higher prices.
De facto we still have generally the same distribution system as in the 90ies in the film boom era. Despite having all the severe and dramatic changes in the market in the last 22 years.
The film distribution should be and could be significantly leaner and more cost efficient today. But nothing is changing in that regard.

Best regards,
Henning

 

[Anon Ymous]

Making a 1000' roll of film is relatively inexpensive.
Converting that 1000' of film into 180 rolls of cassetted, frame numbered rolls of 135-36 film, packaging those rolls, and getting all those rolls into the hands of local distributors spread around the world costs a lot!

Indeed! Taking this 1000' roll and making 180 135-36 rolls out of it is even more expensive than making 120 rolls.

 

[Henning Serger]

I am not one who believes film is hugely over priced these days,

Mark, unfortunately in the case of KA it is, at least with some film types and in certain markets.
In the last two price increasing rounds EK increased the prices by 'x', and KA by that 'x' plus additional mark-up of 'y'. It has not only been the increased production costs (raw materials) and investments in increased confectioning capacities at EK.
Here in Europe e.g. the Kodak BW films are overpriced, and also the consumer CN films, E100, Ektar and Portra 400. Portra 400 is a real rip-off compared to Portra 160. Because of the much much higher sales numbers of P400 there are significant economy-of-scale cost benefits for P400. The huge price difference to P160 is not justified (also because of the qualities of P160). But as all the youtube influencers are cheering P400 (and ignoring P160), and the film-hipster herd is following uncritically, it is quite easy for KA to sell overpriced.

Best regards,
Henning

 

[Alan Edward Klein]

Making a 1000' roll of film is relatively inexpensive.
Converting that 1000' of film into 180 rolls of cassetted, frame numbered rolls of 135-36 film, packaging those rolls, and getting all those rolls into the hands of local distributors spread around the world costs a lot!

My local supermarket sells small watermelons for around $4 whole and for $8 they'll cut up 1/4 a melon all sliced into mouth-size bites ready to go in a plastic container. Seems they have the same problem as Kodak?

 

[Alan Edward Klein]

Here in Europe it is even worse:
Even the biggest European film shops which are selling ten-thousands of Kodak rolls p.a., are not allowed to buy at KA directly. They all have to buy at the wholesalers. To the higher prices.
De facto we still have generally the same distribution system as in the 90ies in the film boom era. Despite having all the severe and dramatic changes in the market in the last 22 years.
The film distribution should be and could be significantly leaner and more cost efficient today. But nothing is changing in that regard.

Best regards,
Henning

It may not be profitable for Alaris to distribute down to the store level. There wouldn't be enough business to hire all those sub-distribution employees. On the other hand, the smaller distributors handling Kodak delivery to the stores also handle other film manufacturers and equipment as well. They're not just distributing Kodak Alaris film. It's only a small part of their sales inventory.

 

[Alan Edward Klein]

Mark, unfortunately in the case of KA it is, at least with some film types and in certain markets.
In the last two price increasing rounds EK increased the prices by 'x', and KA by that 'x' plus additional mark-up of 'y'. It has not only been the increased production costs (raw materials) and investments in increased confectioning capacities at EK.
Here in Europe e.g. the Kodak BW films are overpriced, and also the consumer CN films, E100, Ektar and Portra 400. Portra 400 is a real rip-off compared to Portra 160. Because of the much much higher sales numbers of P400 there are significant economy-of-scale cost benefits for P400. The huge price difference to P160 is not justified (also because of the qualities of P160). But as all the youtube influencers are cheering P400 (and ignoring P160), and the film-hipster herd is following uncritically, it is quite easy for KA to sell overpriced.

Best regards,
Henning

A product is not overpriced if the demand is there which allows the seller to price it at a higher level. The price is just where it belongs. Sotheby's just completed auctioning of many Ansel Adams photos at double and triple expected offers what they anticipated to occur. Even experts can be wrong. Go figure!

 

[Henning Serger]

It may not be profitable for Alaris to distribute down to the store level.

I have not talked about that, Alan. Please read my post. I have talked about the fact that huge international online film distributors who are selling ten-thousands of Kodak films p.a. are not allowed to buy directly at KA. But have to buy at wholesalers.

Best regards,
Henning

 

[Alan Edward Klein]

I have not talked about that, Alan. Please read my post. I have talked about the fact that huge international online film distributors who are selling ten-thousands of Kodak films p.a. are not allowed to buy directly at KA. But have to buy at wholesalers.

Best regards,
Henning

Manufacturers can't offer lower prices than their wholesalers can sell their products to the stores and compete with them. The wholesalers will tell them to get screwed and drop their lines. Smaller stores whio are also paying higher prices will drop their products as they can't compete with the bigger stores now at all. Also there could be violation of anti competition and monopoly laws.

 

[Henning Serger]

A product is not overpriced if the demand is there which allows the seller to price it at a higher level.

It is more complicated:
1) Before the last two KA price increasing rounds we've had double digit growth rates p.a. in the CN film market. That was destroyed by these price increases. There is no double-digit growth anymore. The demand has suffered significantly. Lots of photographers have stopped using film because it has become too expensive in their opinion. And lots of photographers have reduced their demand and film usage because of costs.
2) We are in a very sensible / potential instable situation now: Further significant price increases will result in much further decreasing sales and the end of the film revival trend. For a continued film revival at low(er) growth rates we absolutely need stable or better (a bit) decreasing prices.
3) At the moment we have a de facto CN film monopoly of Kodak. Monopoly situations are always very bad for markets, as they lead to higher prices compared to a market with functioning competition, and to less innovation. The price level of colour film in the market is currently about 10-20% (depending on film type) higher compared to a situation with functioning competition.

Best regards,
Henning