Gone in a Flash: Olympus leaves camera business after 84 years
July 16, 2020
2 min read
What's going on here?
Olympus is selling off the camera division of its business after 84 years in the sector.
What does this mean?
Once one of the biggest companies in the camera industry, Olympus, has chosen to quit after the market became unprofitable. The former camera giant has recorded losses for the last three years, largely caused by the increase in digital smartphones reducing the demand for standalone cameras and the recent economic downturn caused by the coronavirus pandemic. The company implemented measures to combat the shrinking market, but inevitably they were not enough.
Olympus is selling their imaging business to the private equity firm Japan Industrial Partners. So far only a memorandum of understanding has been signed, however a permanent deal is hoping to be agreed by September.
What's the big picture effect?
Olympus’ actions are the result of a decrease in demand for digital cameras over the last decade, with one estimate predicting a decline of 84% between 2010 and 2018. This has not been helped by the coronavirus outbreak, which has caused a global economic downturn. Specific to the camera industry, the pandemic has led to the postponement of the 2020 Tokyo Olympics, which may otherwise have acted as a “Hail Mary” for Olympus, allowing it to advertise its camera products and assist with the camerawork.
It is likely that Olympus’ exit will lead to a significant shake-up in the Japanese camera industry. Nikon, another digital camera maker, has also been struggling, posting losses of 17.1 billion Yen ($158 million) at the end of the fiscal year in March 2020. Nikon is aiming to cut 50bn Yen from their operating costs by 2022, but even this may not be enough. Other camera companies such as Ricoh and Panasonic are likely to continue to struggle. Camera giant Canon, whilst still profitable, has seen its margins fall significantly.
Some analysts predict that the market is in danger of collapsing completely if companies don’t make radical reforms. These may include separating design, development, and manufacturing, and consolidating production.
However, it may be the case that a reduction in competition proves to be the saving grace the industry needs. As Hiroshi Hamada stated in 2009, “digital camera companies intend to strangle their rivals through excessive competition, but in the end they’ll strangle themselves”. It is possible that Olympus’ exit from the market will give other companies the opportunity to increase sales.
Despite leaving the camera industry, Olympus still remains heavily invested in other sectors, specifically medical and scientific equipment.
Report written by Conor McDermott
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