Back in May I opined about the future of Avid Technology, in response to a Reuters report that Avid was pursuing a sale of the company. Yesterday (Aug. 9, 2023) that came to fruition as Avid announced an agreement to sell to STG, a private equity firm. When finalized, this will convert Avid from a publicly traded to a private company. Stockholders will be paid a premium over the low share price at the time of the May report, but lower than its high point over the past year or so. That’s a bit of a compromise price, but if you bought Avid stock a few years back when it was really low, then you might make a nice profit. In this deal, STG will also pick up any current Avid debt. If you want a deeper look into the financials, here is the analysis done by Devoncroft Partners on the day before the STG announcement and then again afterwards.
As I wrote in May, I have no inside information and no knowledge of what Avid plans to do going forward. In that post I discussed a number of possible outcomes. While we now know who is buying Avid, we have yet to find out what the future path is. I suspect that more will be revealed in the period between IBC and the next NAB. Things should be pretty clear come April 2024.
It’s important to remember that Avid has a range of products to offer. It’s not all about Media Composer or Pro Tools. For example, the product portfolio also includes Sibelius music notation software, cloud services, storage, centralized facility workflow systems, graphics, and of course, associated hardware to support all of these product lines. However, Devoncroft makes an interesting observation that the audio side of Avid – primarily Pro Tools – is estimated to bring in nearly half of the company’s revenue.
This bolsters one of my possible outcomes that the Pro Tools portion of the company could be spun off as a separate entity and do quite nicely. However, they rightfully point out that it’s been part of Avid for about 30 years, so breaking them out could be quite complex. Furthermore, I think that could weaken Avid’s overall market position and not be in the best interest of film and TV post customers. After all, after three decades, Media Composer and Pro Tools are just now becoming better integrated. Once spun off, there’s no great reason for Media Composer and Pro Tools to be optimized with each other in mind. Heck, I have both Apple’s Final Cut Pro and Logic Pro. They are owned by the same company, yet don’t particularly work hand in glove.
If you’ve heard this news and think “Avid is dead,” then you’d be wrong. Avid products are ingrained within many enterprise operations and large scale rental suppliers worldwide. I doubt there are many pro recording studios that are not based around Pro Tools. And it certainly has a larger footprint in the amateur music space than does Media Composer with independent video editors. Nevertheless, tons of spots, corporate videos, news stories, and TV shows – not to mention indie and studio feature films – are still cut with Media Composer. A high profile project getting cut on Final Cut Pro, Premiere Pro, Lightworks, or Resolve might make the trade press, but the numbers among pro users still favor Avid – both Media Composer and Pro Tools. That isn’t going to change unless there are drastic issues. Switching a large facility over to different products – and by necessity different workflows – is painful and disruptive.
What could private ownership under STG look like? That’s an unknown. From the looks of their portfolio of companies, STG backs data and software tech companies. Quite frankly I’m not too familiar with most off the names, but it would appear that Avid would be their first investment into a company in the media and entertainment space. That could prove to be a challenge, especially if they expect dramatic growth potential in a mature company like Avid. Up until know, Avid has never been hugely successful with any of its attempts to go “down market” and capture a retail customer. It’s an enterprise-focused company in an increasingly fragmented market sector and that doesn’t spell dramatic growth.
Historically these types of buy-outs have led to cost cutting moves and a shrinkage of the product line. I hope I’m wrong, because I still think the products are good and I know a lot of good people who work for Avid. With any luck this could result in more money for R&D, not less. As a positive example, the website Production Expert points to Audiotonix’s successful ownership of such brands as Digico, SSL, and others. For the immediate future, I would expect a complete shift over to only subscriptions for products and services, except for hardware. If I’m right, then holders of perpetual software licenses will see that version of the app became EOL, but probably continue to work as long as your computer hardware and OS supports it.
If you are young and moving into professional film and TV post, it’s still valuable to learn and know Media Composer and/or Pro Tools. If you are an established editor or mixer who uses these tools now, then it’s not time to jump ship. They will continue to work and be an important part of post workflows for years to come.
©2023 Oliver Peters
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