|This company is or has gone private. Information about the company may be limited and outdated.|
Getty Images is the world's leading distributor of licensed imagery and film. The company based its success on the use of the internet and digital technology to grow its customers and brand recognition. Getty's distribution flows through two websites where its images are catalogued, gettyimages.com and istockphoto.com, and nearly 100% of the firm's image library is delivered digitally. The firm reports that each month, its 3.2 billion thumbnails on gettyimages.com are viewed by 7.3 million visitors and 4 million unique users, with an average of 175 million monthly page views.
The explosion of digital photography and internet image searches has significantly impacted the stock photography industry. Getty Images has taken advantage of these changes to become the leader in its market, becoming the first company to license imagery via the web and mobilizing the entire stock photo industry to move online. The firm has consolidated its first mover advantage through a series of acquisitions and has taken steps to digitize its entire library. Gettyimages.com attracts large numbers of users, which in turn draws photographers to Getty's platform in order to reach the large population of viewers. These new sources further expand the site's vast library - and attract even more buyers in a cycle that allows Getty to continue building its revenues.
But Getty's successful exploitation of the internet as a distribution platform also has its drawbacks, especially in spawning competition. The widespread use of digital cameras and the ease with which images can be adjusted and displayed on the web has created a wealth of imagery on the internet. A number of competing independent sites have emerged that aggregate content and distribute it at a much lower cost. Getty has recognized this threat to its business model, moving to take advantage of this additional market. Its 2006 purchase of iStockphoto, the largest of its low cost competitors, exemplifies this strategy.
Getty Images was sold to a private equity firm Hellman & Friedman for $ 2.4 Billion at a 55% premium of their January 18 share price.
On august, the 15th, 2012, it was announced that the Carlyle Group, along with getty images' management and founders had acquired getty images from Hellmand & Friedman for 3.3 billion dollars.
Getty Images has 21 offices worldwide and tailors its products and services for customers in more than 100 countries. It uses direct and indirect sales forces to reach its customers, which include advertising and design agencies, publishers, corporate communications departments, and film production companies. Getty offers localized image data and contextual search capabilities in 6 local languages, and its products are seen by millions of people each day in newspapers, magazines, advertising, films, books, on television, and on the web.
Products and Services
CREATIVE OR “STOCK” IMAGERY - Getty sells creative, still images that cover a wide variety of contemporary subjects including lifestyle, business, science, health and beauty, sports, transportation and travel. Imagery is offered to customers through Getty's own creative photography collections as well as through image partners such as National Geographic and Time Life Pictures.
EDITORIAL IMAGERY - Getty covers major world events in order to supply news, sports, and entertainment photographs to customers who are reporting on these subjects. Editorial imagery also includes extensive archival image collections containing iconic and historic imagery.
FOOTAGE - Getty offers film images to customers engaged in producing commercial motion pictures, TV advertisements and programming, web-based advertisements, documentaries and other footage-based media. Getty has its own footage collections and also licenses the collections of image partners including Universal Studios.
OTHER - Getty also provides assignment services, where it handles all aspects of a custom photography project for a customer. This might include photographing executives for an annual report, producing product shots for a brochure or documenting a news or sports event. The firm also offers media management, a hosted service that allows customers to manage their portfolio of digital assets, including images and other marketing materials.
Getty's operating margin reached a high of 31% in 2005, but decreased to 24% in 2006. Causes for this decrease include a rise in professional fees, stock-based compensation, and expenses related to their acquisitions (including iStockphoto). As seen above, however, revenues have increased every year since 2002 as Getty pursues its strategy of acquiring new image libraries and forming partnerships with photographers. New acquisitions in 2007 included MediaVast, Inc., which licenses film footage through its website wireimage.com, and Publisher's Toolbox, Inc., a leading distributor of stock photography to design and communications firms through its Punchstock brand. The below chart demonstrates the large amounts of capital that Getty Images devotes to the acquisition of competing businesses and image libraries.
|GYI Cash flows from investing activities (thousands $)
|Acquisition of businesses, net of cash acquired||-198,319||-254,749|
|Acquisition of property and equipment||-61,543||-62,865|
|Acquisition of available-for-sale investments||-9,330||-34,868|
|Proceeds from available-for-sale investments||304,443||3,101|
|Other investing activities||300||n/a|
|Net cash (used in) provided by investing activities||35, 551||-349,381|
Getty Images incurs significant cost of revenue, in the form of royalties owed to contributors, such as photographers, filmmakers and image partners. Getty pays royalties ranging from 10-50% to manage the licensing rights to these images. Getty also owns the copyright to certain images in its collections (royalty-free imagery) for which it does not pay any third party fee. The company incurs royalty costs in the licensing of editorial and film content as well. Acquisitions of new businesses and their image libraries reduces cost of revenue for Getty, as it gives the firm royalty-free rights to this content. Below are average cost of revenue percentages for each type of image:
|Rights-managed still imagery||33%||33%||34%|
|Royalty-free still imagery||24%||20%||16%|
Getty Images competes with just two major firms in its industry - the publicly traded Jupitermedia Corporation (NASDAQ: JUPM) and the Corbis Corporation, a private company owned by Microsoft (MSFT) founder Bill Gates. As seen below, Getty's revenues dwarf those of its rival Jupitermedia. Corbis Corporation's revenues are not publicly available, but its image library of over 100 million falls far short of Getty's collection of 3.2 billion.
|Revenues (MM$)||Getty||Jupitermedia||Corbis Corp.|
Getty's stiffest competition comes not from its corporate rivals, but instead from independent websites and bootleg distributors. The widespread use of digital cameras and cell phones with camera features have made it easy for amateur photographers to produce their own content, and blog sites, social networking sites, and cheap web hosting platforms make it easy to post pictures publicly, where anyone can view and download them for little or no charge. This drives down the prices that Getty can charge for its licensed content.
Getty Images has recognized this trend, moving to purchase some of the larger sites that distribute stock photography at low costs. The company also continues to maintain relationships with professional advertising and design firms that are not likely to switch to low quality, low cost images. Last, it continues to purchase its smaller competitors and their image libraries, while branching out into new industries. In this way it hopes to retain its large market share and advantage over its competitors.