The Long, Slow, Sad Death of a Film Empire

Eastman Kodak is a name that means little to anyone born after 1990, but means a whole lot to the generations before. In case you’re too young to be familiar with exactly what Eastman Kodak was well known for, EK ruled a global film empire — where not only most films produced throughout the world used EK film, but medical equipment also relied on many EK processes and technological advances.

And then, over a period of about 20 years, the entire business collapsed in on itself like a dying star, with its final gasps still resonating today.

The Kodak Moment

In 1888, George Eastman registered “Kodak,” and pretty much invented the concept of “amateur photography” by creating his first Kodak camera:

The first Kodak camera wasn’t much to look at, but changed everything.

The innovation and domination continued unimpeded for a very long time after this.

For a quick overview:

  • in 1892 the Eastman Kodak company officially forms in New York and creates a camera with a simple loading mechanism
  • in 1895 EK creates “the pocket camera” — the smallest iteration of the camera for consumers yet
  • in 1898 EK purchases the patent for “Velox paper,” the first commercially successful “photographic paper”
  • in 1900 the “Brownie” camera is introduced — an even cheaper, smaller, and more accessible consumer camera:
The “Brownie Type 2”
  • in the late 1800s-early 1900s, Kodak is listed publicly (thank you BitcoinDurp for this information)
EK ticker symbol listing in the NY Daily Tribune from 1899, courtesy of BitcoinDurp
  • in 1908 the Motion Picture Patents Company, a cartel of the US film industry, adopts official policy to only use Kodak film stock. The cartel is disbanded in 1915
  • in 1920 Tennessee Eastman, a subsidiary, is founded. The company’s purpose is to manufacture the chemicals needed for photographic equipment
  • in 1930, less than a year after the beginning of The Great Depression, Eastman Kodak is added to the Dow Jones Industrial Average
  • not a net positive for the company, but in 1932, in a weird turn of events, George Eastman, age 77 and worth $84 million (inflation adjusted $1.6 billion), shoots himself, leaving the suicide note “My work is done. Why wait?”
  • in 1935, EK invents Kodachrome — the most widely distributed form of color film used by professionals for decades to come
  • in 1936, during the build up to WWII, EK takes on manufacturing hand grenades as a new business
  • during WWII EK becomes one of the most contracted corporations by the US government
  • in 1958 EK creates super glue
  • in 1963 EK introduces the Instamatic, one of the simplest and easiest-to-use cameras up to that point:
The Instamatic

The Beginning of the End Never Feels like the End

The beginning of the end of Kodak is actually a huge, innovative step — one that Kodak completely blunders.

In 1975, Steven Sasson, an electrical engineer at Eastman Kodak, invents the very first digital camera.

The first digital camera

The problem is that instead of pursuing this incredible feat of human perseverance, EK simply… ignores it. Why? Because business is booming: 90% of all US film sales are Kodak, 85% of all US camera sales are Kodak, and the company seemingly has very little to worry about in consideration of its future.

In fact, EK continues to pour money into R&D, and indeed contributes to some fascinating ventures for medical imagery, film, and chemistry industries. But repeatedly, they failed to seize these opportunities, letting huge advances and interesting thought processes flounder and die.

Kodak really begins to fail by refusing to create marketable, efficient, and popular consumer products for years and years.

An Achilles’ Heel Exposed

In 1988 Kodak makes a big, huge, multi-billion dollar mistake, purchasing Sterling Drug for $5.1 billion. On the surface, the purchase makes sense: Sterling is a leading medical imagery company, and incorporating it under the Kodak corporate umbrella — the leading supplier of film for the medical industry — seems like a no-brainer.

It doesn’t work out. First, Kodak sells the pharmaceutical side of Sterling for $1.65 billion in 1994. Then, despite the medical imaging business being the supposed main reason for the purchase, the medical imaging branch of Sterling is sold for a mere $450 million a week later. Shortly thereafter, the OTC drug side of the business is sold off for $2.92 billion and lastly the US OTC drug division for $1 billion. Inflation adjusted, this means EK spent $6.39 billion on the purchase and sold off all the assets at a loss for $6.04 billion — a $300 million misstep.

It also makes the unprecedented and incredibly stupid decision to spin off the Eastman Chemical division — a company which is still listed on the NYSE and has done a lot better than its former parent company:

Eastman Chemical has faired far better than Kodak

The next decade sees zero innovation or change of direction from the film juggernaut.

Mistakes are like Interest — they both Compound

In 2004, it becomes exceedingly clear that EK is in dire straits: EK stops selling traditional film cameras, fires 15,000 employees, and is delisted from the Dow Jones Industrial Average after 74 consecutive years.

The next six years are a long and sad process, where EK, while losing value on the stock market and not innovating in any way, shape, or form, also sells off any assets that could possibly one day make it profitable again.

In 2010, EK is delisted from the Standard & Poor’s index.

Two years later, in 2012, EK files for Chapter 11 bankruptcy and is finally delisted from the NYSE.

The New Kodak Moment

After emerging from bankruptcy and selling off almost all of its remaining assets, Kodak is relisted on the NYSE in 2013, vowing to seek profitability in “print systems, enterprise inkjet systems, micro 3D printing and packaging, software and solutions, and consumer and film” industries. That is a lot of industries. A lot.

But that’s not all, folks.

In January of 2018, just as the Bitcoin bubble is bursting, Kodak announces it is also venturing into the blockchain industry. Because pictures and blockchains — why not?

The stock price instantly sees an effect:

The price for one share of KODK went from $3.00 to $11.00 almost overnight because “”blockchain””

This venture truly fails to materialize, and that is reflected in the charts, the market devaluing Kodak to between $2.00 and $4.00 a share. Until…

We’Re A pHaRmA CoMpAnY NoW bRo

Truly having no experience in the pharmaceutical industry, besides a brief foray with Sterling Drug that ended in failure, Kodak decides to become the COVID vaccine team of choice. There is no reason provided for why this could possibly be a good decision, but nonetheless, the government agency, The Department Finance Corporation, promises to loan Kodak $765 million to find a coronavirus vaccine.

Again, this drastically changes the stock price:

KODK had a marketcap of roughly ~$200 million before the loan was announced. After the loan was announced, KODK obtained a marketcap, briefly, of roughly $2.5 billion.

Unfortunately for Kodak, strange transactions and donations are reported on by a number of financial media outlets, which make it quite clear that executive leadership and board members are making monetary decisions based on insider information.

Thankfully, Kodak’s internal investigation, like, totally proves that Kodak leadership did nothing wrong:

Bloomberg reporting on the internal investigation

Guess we’ll have to wait and see what a governmental investigation decides.

There is no moral story or lesson to be learned here, just a fun story about a film empire that lost its way slowly, repeatedly, and continually, up to this very day.

Stay skeptical, friends.

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