Getty images is a simple concept put into a beautiful business. Basically, this is what they do, they create, make, obtain, or whatever you want to call it, quality photography and other visual content. And then they sell these, or license them to professionals, companies and regular people like you and me. It was amazing how such a simple idea could do so well, and with that, they started trading since 1998. Their business really peaked by late-2005, and their share prices even went as high as 94 bucks. But since 2006, it's been diving and without God's help, I don't know how they'll do this year.
Will they start double digits growth again? Not really.
Will they get back their market share they've lost to others like Fluor or Corbis (owned by the one and only Mr. Microsoft Gates)? Highly doubt it.
The main problem at hand is that the company is lost in direction really aren't leveraging their name and loyal user-base well enough. Their competition is taking that to their advantage. Look at their apparent problems at hand:
Business Landscape: Face it, Getty's core business is still their stills business - 77% of overall revenues. And its under incredible amount of pressure. First Internet is so much more important to advertising and marketing in such a way that print content is taking a hit. Then you got new licensing ideas where instead of the rights ready traditional payment method, you got alternatives like micropayments and installments.
Micriopayments: And a little more on micropayments, The uncertaintyon magnitude of micropayment's effect over traditional is MY biggestNO-NO on buying the stock. Would you pay 200 bucks ratherthan 2 bucks on trade payable terms? With micropayments, user-generated RF images canbe sold at prices as low as a buck, and it will shake up Getty'score business model for sure. Getty already entered this arena by taking over iStockPhoto in February 2006. iStocksPhoto is growing rapidly and even though Getty is well-positioned to benefit from this trend, the uncertainty is how it will cannibalize their traditional core business.
Maturing & Cyclical Industry: The RM industry (38% of total) is quite mature already if you think about it. A matured industry just puts the limit to price and volume growth. And I don't see Getty making any drastic moves to expand. Plus for the outlook, think where our economy is heading towards. I don't see 2007, and even 2008 to be better than what we've already gone through. Advertising is extremely cyclical to spending, and since Getty's business is so closely tied to spending on creative advertising and marketing, do you think 2007, and even 2008 will be better than before? So think again.
Just for the sakes of disclosure, I don't own any of Getty's stocks, in real-life or even here on BullPoo.