Consumers’ priorities have changed significantly in recent years, a Panasonic executive told us at this year’s CP+ show in Yokohama, Japan. Meeting those new priorities is part of the challenge, and Panasonic sees new energy not exclusively in full-frame flagships, but also in the small, portable cameras that smartphones never fully replaced.

At CP+ in Yokohama, Japan, we sat down with Toshiyuki Tsumura, Executive Vice President and Director of Panasonic’s Imaging Solution Business Division, Takayuki Takabayashi from the Imaging Solution Business Division and Takashi Yamahara, head of the Global Marketing Division and Master of Project Design at Panasonic. In a wide‑ranging conversation, the team shared their candid thoughts on where the camera market is headed, how Lumix plans to serve a new generation of creatives and the role of AI in imaging.

The changing camera market and why compact cameras are booming again

Panasonic’s LX100 II was a well‑liked enthusiast compact, but it dates back to 2018. Photo: Jeff Keller

“In general, the camera market is growing,” says Tsumura. “For several years after COVID, the camera market shrank, but since then, it has been growing gradually every year. Last year it was up seven percent compared to the previous year.” That’s certainly good news for photographers, as a healthy camera industry means more support moving forward.

However, Tsumura is quick to point out that it’s not the same market that peaked a decade ago, and consumers now have different priorities. “Previously, the driving force was high-end full-frame cameras. But recently, the value-zone cameras are driving the market, such as entry-level mirrorless cameras or compact cameras,” Tsumura explains.

“The trend is shifting toward compact cameras,” Tsumura goes on to say. “The reason is that a lot of people enjoy making and sharing photos and videos, and they want better image quality as much as possible. Many people feel that smartphones cannot fully satisfy their desire for good image quality.”

“The trend is shifting toward compact cameras.”

In Tsumura’s view, compact cameras offer three distinct advantages over phones: better low-light performance, longer (and higher-quality) zoom, and options like genuine waterproofing. He points out that younger generations see images and videos constantly, and their analysis of those users found that they can distinguish the quality difference between smartphone images and those made with dedicated cameras.

For Panasonic, that shift could create a new kind of opportunity. Whether that means we should expect a new Lumix compact camera remains to be seen, but it is clear that Panasonic recognizes the shift in priorities and isn’t ignoring it.

The future of Micro Four Thirds

The GH7 was Panasonic’s last truly new Micro Four Thirds camera, though it was closer in size to full-frame hybrid cameras, rather than leaning into the compactness of the format. Photo Dale Baskin

Given the interest in smaller camera systems, we also asked the Panasonic team about Micro Four Thirds cameras. “Every year, we strengthen the Micro Four Thirds lineup, and we would like to continue this kind of development,” Tsumura says.

The reason comes back to the same shift that’s reshaping the broader market. Micro Four Thirds’ core strengths are still compactness and low weight, and when you factor in lenses, the overall package can be significantly smaller than an equivalent full‑frame kit. That matters for the entry‑level and step‑up users Panasonic is increasingly targeting. “That’s what entry users are requiring right now – portability and compactness so they can bring the camera everywhere,” Tsumura explains. “So we are studying what kind of value we can propose to those users now and in the future with Micro Four Thirds.”

“In the past, the ‘battlefield’ of cameras was resolution and sensor size. Now it’s a little bit different”

At the same time, the company’s expectations for the system have evolved. “In the past, the ‘battlefield’ of cameras was resolution and sensor size. Now it’s a little bit different,” Tsumura says. Panasonic now sees new customers who are more focused on the experience of using a camera and how it fits a specific purpose.

There’s still room for more pro‑oriented full‑frame body

The S1H is the only S-series camera that hasn’t seen an update. Photo: Dan Bracaglia

On the other end of the spectrum, the S1II is one of the most capable hybrid mirrorless cameras for video, but Panasonic thinks there’s room to take it even further. While the original S1H remains the only first‑generation S‑series body without a direct successor, Tsumura avoids promising an exact S1H II. Instead, he frames the project more broadly: “Video production for the ‘prosumers’ is getting more and more important,” Tsumura explains. “We are now investigating what kind of professional features we need to incorporate into new professional-type video cameras.”

For what’s next, the team is studying real applications, usage patterns and system requirements for higher‑end production, rather than just stacking on specs. As Tsumura puts it, they are looking beyond the current S1 II, “which already incorporates a lot of good video features, we are studying what we need to improve and what we need to add. That’s what we’re working on now,” he says.

AI and computational imaging as core pillars

Computational photography has been a focus for Panasonic for some time, and AI is now an additional area of consideration. Inside Panasonic, AI isn’t treated as a side project but as a central pillar of future camera development. “We put a high priority on computational imaging,” Tsumura says. “This is very important for us. In order to evolve this area, we utilize AI technology.”

“We can’t say which companies, but we are talking with many partners and getting advanced technologies from them.”

Panasonic isn’t tackling AI integration alone, though. “To incorporate concrete AI technologies, we are now contacting lots of AI technology partner companies,” Tsumura tells us. “We can’t say which companies, but we are talking with many partners and getting advanced technologies from them. We then select and incorporate these technologies into specific features.”

Twenty‑five years of Lumix

Finally, this year marks the 25th anniversary of Lumix, though internally, it seems Panasonic frames the milestone less as a victory lap and more as an obligation. “We were almost the last player to enter this camera market, so we feel we have a duty to continue this journey because of the customers who have supported us,” says Yamahara. “The 25th anniversary is a kind of milestone, but we also need to continue beyond it.”

In a nod to the anniversary, we ask Tsumura which single product he sees as the most important in Lumix history. Without any hesitation, he responds: “the G1, one of the first mirrorless cameras. That product created the mirrorless market and changed camera culture.”

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