Getty Expands in China . . .
Stock Asylum Staff Report
July 26, 2005
Getty Images will expand its presence in China next month with the opening
of Getty Images China and the launch of a new Chinese Language web site.
The new operation, headquartered in Beijing, will be Getty's first significant foray into the commercial side of the Chinese market. The stock photography company opened an editorial bureau in Beijing earlier this year.
In a conference call with industry analysts, Getty CEO Jonathan Klein said the initial investment in China will be modest, "less than a couple million dollars on the commercial side."
He said Getty remains concerned about the lack of protections for intellectual property in China and said this concern is reflected in the size of Getty's Chinese investment. Klein expressed hope that the China will move to better protect intellectual property like copyrighted photographs in the coming years.
The move into China is part of a strategy of aggressive global expansion, "particularly in rapidly growing non-English-speaking markets," the company said.
According to Klein, "China is currently the fifth largest market in terms of advertising spending and is poised to surpass Japan and become one of the world's largest advertising markets."
The Chinese language web site will be e-commerce enabled and will offer all Getty Images' content as well as photography and illustration from the company's image partners. Image partners are independent stock distributors that offer stock imagery on the Getty Images' web site. Both rights-managed and royalty-free imagery will be available in China.
In addition, the Seattle-based Getty Images will create photography specifically for the Chinese market.
In other matters, Klein said that both the Digital Vision and the Photonica West acquisitions have been completed. Getty announced the purchase London-based Digital Vision for $165 million in April and bought Photonica West from Amana of Japan in a $51 million deal announced in May.
Digital Vision had been one of Getty's image partners, so many Digital Vision images were already on the Getty Images web site. Klein said nearly all the 150,000 Photonica West images from the Photonica and Iconica brands have been integrated into the Getty Images web site. The process took a mere three-and-a-half weeks, Klein said.
The Getty CEO made a reference to "Image partners that have not been acquired, yet," raising questions about future acquisition plans. Getty Spokesperson Deb Trevino later noted that Getty Images generates cash at the rate of about $200 million a year and "may choose to spend it on acquisitions."
Klein added that, "We clearly have the wherewithal to acquire anything in our industry. But, more importantly, we have the discipline to 'just say no.' We will not pay crazy prices for businesses or collections -- no way."
Klein mentioned that Getty Images will start a subscription stock imagery service. He said it will launch in August.
Subscription services, like Photos.com, a JupiterImages brand, let photography users download nearly unlimited numbers of images for a monthly fee. Klein first mentioned the possibility of a similar Getty product during the April analysts conference call, after announcing the Digital Vision acquisition. Much of Digital Vision's photography is wholly-owned, a necessary requirement for the imagery on any subscription service.
Klein also told analysts that Getty Images licensed some 56,000 more images in the second quarter of 2005 than it did in the same quarter of 2004, a 17.6 percent increase in volume. He said there was growth in both royalty-free and rights-managed sales.
"This quarter is quite possibly the best quarter in our ten-year history," Klein asserted.
The company reported a net profit of $34 million for the second quarter on revenues of $185.3 million. During the same quarter last year, Getty Images reported net profits of $25.2 million.
Getty Images can be found at: http://www.gettyimages.com
