102 KODAK BUYS PNI
September 17, 1997
After selling Kodak Picture Exchange to Sprint in early 1996, Kodak has jumped back into the business of being a service provider of image databases. They have acquired Picture Network International making it a wholly owned subsidiary of Kodak.
However, this time it is the Entertainment Imaging Division of Kodak rather than the Professional Imaging Division that will be managing the operation.
Interest in the acquisition developed when Rex V. Jobe, CEO of The Image Bank, which is a Kodak subsidiary, began exploring the possibility of either putting some of their images on PNI's Publishers Depot site or setting up a "Media Host" site which PNI would manage for them.
Jobe points out that the important differences are that KPX was always "subscription based" rather than "Internet based." In addition Kodak believes that PNI's Natural Language Search Engine is a very valuable property and a much better way to search for images than the traditional keywording strategy used by KPX.
As part of the deal, SRA (Systems Research and Applications) Corporation transferred to Kodak full ownership in the patents to the Natural Language Search Engine that they had developed for PNI.
Joerg D. Agin, President of Kodak's Entertainment Imaging division said, "With the acquisition of PNI, Entertainment Imaging is moving from a product-based strategy for image management to one based on service and applications."
One of the major "applications" that has potential for development is "Media Host." This software enables companies to set up their own private Internet image database which is managed for them by PNI for a monthly fee. Currently, several "international brand name companies" are using this service and Kodak sees potential for great expansion in this area.
Mr. Jobe said, "if this had been a transaction for a company that just licensed stock photography, we would not have been interested. It is the broader business opportunities that made this acquisition interesting."
Nevertheless, TIB does plan to put a substantial number of images onto Publishers Depot. Mr. Jobe said, "We are still assessing the situation to determine the number of images to put on, but will probably be one of the larger providers which would put the number in the 50,000 image range."
The Publishers Depot file which handles the work of 36 stock agencies and about thirty other content providers has always been very editorially oriented. TIB's corporate and advertising images should add needed balance to the database.
Many stock agencies represented by PNI see this move as a stabilizing influence. Their royalty checks have been steadily increasing to the point that the numbers are now something they can depend on. On the other hand, they have watched the numbers of staff slowly dwindle in the last couple of years. They were concerned that just when the money was getting interesting the organization would fold.Now, Kodak has started adding new personnel and if they can develop the Media Host side of the business as they hope it should add stability to the entire operation.
Entertainment Imaging is Kodak's newest business division. It comprises four areas of activity: Professional Motion Imaging, which serves the motion picture, television, and commercial production markets; the Motion Imaging Platform which develops motion media based on silver halide, digital or hybrid technologies; the Kodak Imagination Works, which is a "laboratory in the marketplace: for innovative imaging concepts; and New Business Ventures, which includes The Image Ban, Themed Entertainment, and other unique applications of imaging.
Rex Job will serve as interim CEO for PNI while a search for a new CEO is conducted.