This week the audio and editing worlds were buzzing with news that Avid Technology was exploring a potential sale of the company. This stems from a single article at Reuters. I have no additional news on this nor any inside information. Not to mention that any such single news article should always be taken with a grain of salt. But, where there’s smoke, there’s often fire. Much of what I’m going to write next about possible future scenarios will be highly speculative.
Avid was the first nonlinear editing system I ever used, so there’s some fondness for the company. In spite of that, these days I mainly edit with Premiere Pro and sometimes with Final Cut Pro. I color correct in Resolve and of all the apps, that’s viewed by many as the up and comer.
At least one vlogger incorrectly noted that Avid was sold. That’s in part due to a principal investor, LVS, indicating that it was selling its interest in Avid back in April. While this might have been a trigger, I’m not sure the two are related. However, having a key investor bow out – coupled with a writers’ strike in Avid’s prime market – does not help their cause.
Avid is more than Media Composer and Pro Tools
Avid Technology is often viewed through the lens of Media Composer or Pro Tools, depending on your position in the industry. Yet, the company is way more than that, with offerings in newsroom software, graphics production, storage, audio hardware, and cloud/remote editing services. We often forget that Avid led the way in developing key technologies that we take for granted today, such as file-based field acquisition (Ikegami EditCam) and software-based color correction (Symphony).
Although Avid is a large company, it’s minuscule when compared with many others. Avid is focused solely on the professional content creation market – broadcast, news, television, feature films, and the recording industry. Despite several attempts, it has never successfully leveraged its technology into a viable consumer product line.
On top of that, Avid has struggled to meet the financial challenges of cheaper alternatives nipping at their heels in the pro space. In the past decade they appear to have reached a stasis point with some growth. This is partly thanks to Apple, when they re-imagined the original version of Final Cut Pro as Final Cut Pro X. That turned off many in the pro market and drove some to Premiere Pro, but also others back to Media Composer. Nevertheless, the Wall Street investment community wants significant growth and that’s hard to achieve for a company like Avid. A shift to a subscription model has been maligned by some, but it’s likely to have helped them. However, missing earning projections – realistic or not – hasn’t.
Hollywood
Ultimately, staking your business model on Hollywood (I use that in a broad sense and not a specific location) probably isn’t a good idea any longer. Film studios and TV producers often work through post companies that supply rental systems on demand per project. They maintain an inventory of decked out Media Composer workstations. Since most of the professional community is risk-averse, many of these rental systems go a while before being updated to newer versions of the software. If it ain’t broke, don’t fix it. Plus, the owners want to maximize their investment in hardware and software. So, even in Avid’s core market, growth isn’t guaranteed.
The movie studios, streamers like Netflix, and TV networks have certain recommended workflows that often dictate Media Composer and/or Pro Tools systems. You would think that offers some stability. However, studios also used to be locked into film and relied on workhorse tools, like KEMs, Steenbecks, and Moviolas. I started video editing in the early days of CMX and, like the film benches, saw it come and go. There’s no guarantee for any of Avid’s products. In fact, in the early software NLE days, Lightworks was preferred over Avid by numerous editors. Yet, it too, is a shadow of its former self.
Who will step up?
So what’s next? I’m only guessing, but there are several options. The first is a simple sale to another investor, investment group, or collection of investors. A second option is to become a subsidiary within a larger company – for example Microsoft, who currently supplies Avid Technology with its cloud services.
Some have opined that a company like Blackmagic Design – who has made numerous strategic acquisitions – would buy Avid Technology. I find that highly unlikely. First, Avid is presumably still too healthy to make it palatable for Blackmagic Design. Second, Blackmagic already offers many products that directly compete with Avid’s and within the same market space. The company simply has no need for what Avid Technology has to offer, unless they only wanted to gut the company for its portfolio of intellectual property.
Apple is another name that pops up. I find that idea totally ludicrous. They have a different view of the marketplace than when Final Cut Pro 1.0 was launched nearly a quarter century ago. Having professional film and TV studios use products with the Apple name and logo is of interest for sure, but in reality it’s a minor blip on their radar.
What about a breakup?
More intriguing is what would happen if the company were split into several entities. After all, the Avid Technology of today has been built out of a series of acquisitions, plus internal development. As I see it, Pro Tools has the best chance of surviving as a standalone company selling audio hardware and software. The Pro Tools application started under the Digidesign brand before that company was bought by Avid. The current audio consoles and control surfaces morphed from Avid’s acquisition of Euphonix.
Audio has a chance of survival as a separate company, simply because Pro Tools has a much stronger presence in the consumer and indie musician community. These products are a staple of most recording studios and there are many aspiring musicians. Search YouTube and you’ll find a lot more influencers using Pro Tools than are using Media Composer. However, it could also be acquired by a larger audio-centric conglomerate, such as Audiotonix, which owns Solid Sate Logic, Harrison, and others. Then there’s the wild card of some music industry luminary buying the Pro Tools unit for its software and consoles in order to ensure their continued development. That’s not totally far-fetched, considering that Peter Gabriel owned SSL for 12 years for exactly that reason.
The next unit to go could be the news, graphics, and storage products. Although Avid storage works well within the Avid ecosystem, storage – even high-end storage – is a commodity product. As a group, this might play well within another broadcast company, such as Grass Valley. If this were to happen, that would be the ultimate irony. Grass Valley is owned by Black Dragon Capitol, which is run by Louis Hernandez, Jr., who was a former Avid CEO. Nevertheless, Grass Valley is already a composite of several other top-tier broadcast equipment companies, including the Grass Valley Group, Snell & Wilcox, and Quantel.
Where does that leave Media Composer?
I don’t mean to imply in all of this that the products, especially Media Composer, have no value. One of Avid’s biggest strengths is collaborative workflows. The closest of the competitors is Adobe with Productions for Premiere Pro. I’ve worked in workgroups using both and Avid still has the edge. If you are working on a large film or reality TV series with a team of picture, assistant, VFX, and music editors, then it’s hard to beat an Avid ecosystem. Unfortunately, that’s a niche.
It’s possible that the Media Composer software unit could go along with an acquisition like I just described. Not so much as Media Composer, but rather as the Newscutter version. This would allow such a company to offer a turnkey news editing solution tied directly to the storage. In spite of being viewed as the marquee product within the brand, Media Composer is the least attractive of all of Avid’s products from an investment and acquisition standpoint. It is the flagship product, but large companies who purchase tons of Avid storage often get Media Composer licenses at loss leader prices.
This brings to mind a different scenario. Since editing on Media Composer seems essential to many in the Hollywood community, it’s not outside of the realm of possibility that a group of Hollywood companies or directors could band together to purchase the assets and personnel necessary to develop, maintain, and sell the Media Composer application. This would not be unlike the Kodak deal pushed by Christopher Nolan, Quentin Tarantino, J. J. Abrams, and others. They brokered an arrangement between film studios and Kodak to keep the company alive and ensure the continued availability of film stock.
And…
Let me stress that it’s all very early and what I’ve discussed is purely hypothetical. Nevertheless, it’s clear that Avid has struggles ahead. If I were a betting man, then the likeliest scenario of all of these is that Avid finds a new investment group and continues along the same path with slight growth and ongoing ups and downs.
Regardless of what happens, if you operate Avid software or hardware, it’s going to continue to work in spite of potential changes. If you are a film or audio engineering student with serious plans to enter into the traditional film and/or recording studio worlds, then for the time being it will be worthwhile to know your way around Media Composer and/or Pro Tools. In the extremely unlikely event that Avid Technology went over the cliff tomorrow, its products would still be in use for some years to come.
So let’s just sit back and see how the story develops. This could be much ado about nothing and like Mark Twain’s comment on reading his own obituary in the newspaper, “The report of my death was an exaggeration.”
UPDATE – Aug. 9, 2023 – Per Avid’s press release: “Avid Technology Enters into Definitive Agreement to Be Acquired by an Affiliate of STG for $1.4 Billion” So we’ll soon find out if there are changes at Avid in the near future. For more thoughts, check out my “Round 2” post.
©2023 Oliver Peters
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