February can be a low month for camera shipments before the spring increase takes hold. This may be because of excess inventory in the distribution chain due to lower than expected holiday sales or delays in new models coming through. Sales are expected to be lower this year but a significant deterioration in the market would put a strain on the whole industry.
I expect that the Compact fixed lens cameras to continue slowing down but the average unit cost to rise as more expensive models take over. Mirrorless cameras should show signs of an increase in both unit sales and average unit cost as they too go upmarket. DSLR's will slow down in the number of units shipped and the average unit cost will deteriorate as more base models are sold.
We will take a look at the market as usual by camera type and geographical zone to get the bigger picture. The DSLRs vs Mirrorless Interchangeable Lens Cameras (MILCs) battle will also be addressed as well as the average price for each camera type and zone. Firstly, the overall global picture for February 2016 as reported by the industry body CIPA Japan.
Overall global unit shipments of all types to all zones were down -30.0% when compared to the same month the previous year. This drop was largely due to the steep fall in the shipment of Fixed Lens Cameras (FLCs) such as compacts and bridge cameras. DSLR’s and Mirrorless cameras also saw significant falls in unit numbers shipped. As far as geographical zones, shipments to the Americas again saw the biggest year on year falls with the Americas falling by -41% by units.
The total value of shipments of all types to all zones was down -26.1% in Yen when compared to the same month the previous year. Mirrorless (MILCs) were up 38.1% whilst DSLRs were down -37% and FLCs were down -32.3% on the same month last year. In terms of geographical zones the Americas and Japan saw the biggest year on year falls with the Americas falling by -33.6% and Japan falling -35.5% by total value. Other Areas were up 3.3%.
Europe is the biggest market by geographical zone in terms of units shipped with 34% of the market over the last year. Asia and Americas are nearly equal at 24%/25% with the Japanese market about half their size at 14% and Others at just 2%. Looking at the last 6 months up to Jan 2016 we can see a weakening in the Asian and Japanese market to just 23% and 13% respectively, whilst Europe has made gains of 1%.
In terms of Total Value of all cameras shipped Asia is the largest market with 33% of the last 12 months. Again over the last 6 months, we have seen a recovery of the Asian market and a rise in the market share of Europe to 28%. This, of course, all in the context of a falling overall market.
Comparing the units shipped to each region the overall fall of -30% was made worse by a large -41% fall in the Americas market. This is a worrying trend for the Americas market.
The total value of all digital cameras shipped fell by -26.1% with largest affecting areas again being the Americas, down -33.6% and Japan down -35.5%. Europe and Other Areas fared better with figures of -14.4% and 3.3%. We can see the reason when we look next at the average unit cost for each region.
Average unit cost has improved in Europe, Americas and Other Areas helping to keep the overall market from slipping into the abyss. We will see where this improvement comes from later in the camera type analysis.
Looking more closely at the unit shipment trends since 2014 across the regions all are lower and still falling. This constant falling is due to people moving away from the dedicated digital camera to the use of Smart Phones and other devices. There was an indication the market may be bottoming out in the first half of 2015. Subsequently, a slide in the Asian market along with the Americas and now followed by Europe have shown no signs of reversing and 2016 is predicted to see more shrinkage in the overall market.
Overall total market value is trending down across most zones with only Other Areas holding steady.
Despite the drop in unit sales and revenues, the average unit cost is still trending up. This is especially noticeable in Europe, Americas and Other Areas. Asia is starting to soften and Japan is turning back down. Of course currency fluctuations have a major part to play in this and as we can see from a raw exchange rate adjustment just how volatile this has been. The trend is still rising though.
The market continues to move away from Compact (FLCs) with little sign of that changing. DSLRs show a slight increase in share as Compacts falter. Mirrorless (MILC) cameras have seen an acceleration in market share over the last 6 months but again at the expense of Compacts.
From a Total Value viewpoint, Compacts are continuing to decline but are steady at 34% of the market. DSLR's are also steady at 46% but Mirrorless are starting to nibble away with 20% of the market value. This is most likely due to the introduction of more advanced expensive models such as the Sony A7 range.
Year on year comparison for Feb 2016 shows a -37.9% decline in units shipped for FLC's and -22% for DSLRs. Mirrorless is moving ahead with a 9.5% rise in units shipped. It will be interesting to see if this rise in MILCs continues into Spring. Production is scheduled for this rise to continue but sales may have other ideas.
In total value terms, FLC's dropped by -32.3% and DSLR's by a huge -37% whilst MILCs rose by a equally huge 38.1% in YEN revenue. The next figure on average unit costs should spread some light on why.
Compact cameras have shown a significant rise of 9.1% in average unit cost that I was expecting due to the rise in advanced fixed lens cameras taking over from cheap Compact cameras. DSLRs have dropped in all respects, units, total value and down -19.2% in average unit cost. Mirrorless have shown a healthy rise in unit sales, total value and a 26.3% rise in average unit cost. So a ray of sunshine on an otherwise dull report. Just remember Mirrorless account for just 10% of the overall market in terms of units and 20% of total value.
The ongoing trend for unit shipments confirms Compacts and DSLRs are still falling whilst Mirrorless is showing a slight upturn. The rate at which Compacts are falling has accelerated over the last few months and DSLRs, that had been steady during the first half of 2015, are also falling steadily.
Overall revenues are being driven down by Compacts and DSLRs whilst Mirrorless is heading up towards them at an increasing pace.
Average unit values have been rising over this period but DSLRs have slipped behind Mirrorless and are now dropping steeply. Greater expendable income of the 'baby boomers' who want to downsize is showing in the Mirrorless sector. Young people who still prefer DSLRs simply lack the money to buy more expensive models.
From a global perspective, the market for Still Digital Cameras continues to shrink and this shrinkage has accelerated over the last 6 months. The shrinkage has been more in units that in total value of the shipments meaning the average unit value has improved a little in Feb 2016.
The largest geographical zone for units shipped is Europe but by Total Value it is Asia, taking Japan as a separate zone. Shipments to the Americas have been weak for February setting a worrying trend. The only positive news is shipments to Other Areas have seen significant growth in February 2016.
Trends are generally down apart from the average unit values that seem to keep rising, perhaps due to people buying more expensive cameras that can outperform their Smartphones.
March will have to show a significant upturn in these figures if the digital camera market is not to suffer another major fall that will inevitably lead to industry wide cuts.
Over the last 6 months, Mirrorless cameras have started to eat into the market share enjoyed by DSLRs. DSLRs however, still outsell them by 2.7 to 1. February was another good month for Mirrorless with an increase in shipments and higher value models being sent out. We will have to wait to see if this can be sustained.