Getty Images, Inc. has announced the acquisition of Ireland-based Pixel Images Holdings Limited, the parent company of Stockbyte and Stockdisc for $135 million in cash.
Getty is currently marketing 42,827 Stockbyte and Stockdisc images through its site and industry sources estimate that there may be between 60,000 and 80,000 total images in the Stockbyte collection. Getty has said that it already markets the majority of the collections of the two brands and looks to add the remainder during the current quarter. Other distributors who handle the Stockbyte collection claim that it is among the best selling of all the collections they handle.
Many of the photographers who produce RF for Getty brands have been concerned about falling returns-per-image since Getty acquired Digital Vision a year ago. At least one such photographer who in 2005 almost doubled the number of images he had on the site saw his average return-per-image drop from $147 at the end of 2004 to around $49 at the end of 2005. Other PhotoDisc shooters report similar drops.
In an explanation to photographers as to why Getty felt the need to acquire yet another RF brand the company provided three reasons for acquiring this collection of wholly-owned imagery.
- We can give Customers more choice at different price points.
- We will be able to create more innovative licensing models.
- Crucially, we can extend our reach further into emerging platforms for imagery, like wireless and other non-print market segments, as broadband-enabled technologies create increased demand for visual content.
"Worldwide demand for imagery continues to grow as our customers increasingly explore new, image-rich communication platforms as a means to break through the clutter," said Jonathan Klein, Getty Images' co-founder and Chief Executive Officer. "The acquisition is in line with our strategy of acquiring and producing increased amounts of relevant wholly-owned imagery. The addition of the Stockbyte content will further enhance our ability to offer customers new licensing options, and will further extend our reach into the broadband-enabled and wireless platforms which are fast becoming a significant component of our customers' communications mix."
In 2005 the number of RF images Getty licensed per quarter jumped from 223,461 to 253,713, or 13.5%, but in Q4 the number of images licensed dropped compared to Q3. I attribute a significant portion of the annual growth to the acquisition of Digitial Vision and the adding to Getty's figures sales made by the more than 200 other distributors of Digital Vision content. With the addition of Stockbyte the same type of jump from sales of other distributors handling Stockbyte material might be anticipated.
In 2005 Getty earned $273 million in gross revenue from RF and I think the total market was somewhere in the range of $375 million. Thus, Getty owns almost 73% of the market already and with the addition of Stockbyte that percentage may go even higher. The average price per RF image jumped almost 14%, but most of that happened in Q1 2005. After the Q1 price increase the growth for the rest of the year was 3.5% indicating that the industry may be reaching a ceiling on the prices that can be charged for RF.
It is unclear at this time as to how much more imagery Jerry Kennelly and his team will be asked to produce for Getty Images, or whether Kennelly will remain with the company at all.
The Stockbyte acquisition is expected to be accretive to cash flow and breakeven to 2006 earnings per diluted share, post amortization of intangible assets and synergies. Following a transition period, Stockbyte and Stockdisc will be available exclusively through Getty Images and its channel partners.