SCRI International – Avid Downward Trend Continues

[Juan Salvo]

That’s very interesting. Thanks for posting. I would think the future of consumer editing would be in the cloud. Such as youtubes new editor. I know avid has done a ton of development and research into cloud based editing. Maybe the target for that tech isn’t so much pro as consumer.

online editor | colorist | VFX | BD author

https://JuanSalvo.com

[Chris Harlan]

[Craig Seeman] “Basically I wouldn’t think “creative enthusiast” was enough of their business to do that much damage.”

The audio side of “creative enthusiast” is much larger. A lot of Guitar Center product.

[Craig Seeman]

[Chris Harlan] “The audio side of “creative enthusiast” is much larger. A lot of Guitar Center product.”

From the many bits I heard, Avid is mostly a hardware company (big iron) and I didn’t imagine this stuff would be big enough to be considered that damaging. For example, I’ve heard that their cross grade pricing was not a good short term financial move but since they’re not dependent on that, it would be that bad of a hurt.

The things I read seem to imply Apple beating up on them on the low end. It’s as if FCPX hit Avid’s consumer product sales hard. One would wonder about why Avid would bother with an iPad editor (which has received very good reviews) except maybe they really do need that market . . . or just like Media Composer, they hope it gets people to move up their “food chain.” At least on the NLE side, the low price of MC means some Unity/Isis sales to facilities such as Bunim Murray’s move to Avid.

I don’t see anyone doing anything that would beat them up on their audio toy products. I can’t imagine M-Audio being a major issue one way or another for a company like Avid.

If their “creative enthusiast” stuff is such a drag on a business otherwise trying to turn around (note that articles say other divisions had smaller loses) you’d think they dump that.

Why back when when I posted stuff about Avid’s financials I thought the issue was that they had no clear business model to dig themselves out. This seems to be another piece in the puzzle but it seems an odd piece.

So it’s the “creative enthusiast” that’s dragging them down?

[Frank Gothmann]

I would take such assessement in the article with a grain of salt. Makes for a good catchline but that’s pretty much it. They see Apple NLE, its history and pricing, and they see Avid NLE and then they draw conclusions.
Apart from the iPad App there is no consumer video product from Avid for the Mac so what are they really talking about? I doubt lots of “creative enthusiasts” were all that interested in MC to start with, cross-grade pricing or not. It’s not their market on the Mac, never has been. As far as their PC products are concerned FCPX has no impact.

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[Phil Hoppes]

As in all things there are certain elasticities to a market. With the negative reaction to FCPX in some of the professional market, Adobe looks to have tried to capitalize on this with their current offering in CS6. If you throw in the fact that one seat of Media Composer costs more than one seat of Adobe Master Suite or close to 3x Premier Pro stand alone, and you look at the features in Premier Pro and FCPX and their cost points I’m sure there are a lot of editors who are saying MC is nice but not at that price. I looked at it my self and for my needs it simply does not incrementally add that much more over PP and FCPX. If I now compare that to CS6 PP and the continuous additions to FCPX its a no brainer.

I know Walt Biscardi is very heavily invested in both is legacy and support of lots of tape broadcast customers and for him and other of that need, MC appears to be clearly the choice. For those that don’t I see a whole lot more options.

[Craig Seeman]

Yes, I’m not sure the analysis is correct but the numbers are the numbers.

I find this surprising. We can certainly lay out what’s transpired.

Lots of cross grading to MC. Probably at a price point that’s not, in itself, profitable.

Many have said that’s not where their profits would be from anyway. It’s not the predominant engine of their business. That would be their hardware (Unity, Isis, etc).

Apparently all those MC cross grades didn’t generate a healthy enough uptick in hardware sales.

I haven’t a clue why sales to “creative enthusiasts” would be a big factor. That truly throws me.
Even if that analysis is wrong, the numbers are right. Despite the FCP fallout they’re not really turning things around. Something seems to be seriously wrong here.

I posted these but there’s several other articles along similar lines. The numbers just aren’t good.

It seems the recent market decisions Avid is making is a $999 Symphony cross grade and an iPad app (with impressive reviews). So what’s the turnaround business model here?

That they developed an iPad app certainly does seem to target “creative enthusiasts”

The Symphony cross grade may portend a “consolidation” of MC and Symphony into a single product. Maybe they hope this will jump hardware sales.

Consider that MC/Symphony is now facing competition from Adobe with CS6.
Consider that Smoke might be entering into that tier of the market.
How does Avid dig out?

This has to be a company facing a major shake up of some sort.

[Frank Gothmann] “they draw conclusions.”
Maybe their reasoning is wrong but the loses seem to be real. You can argue that some of these “Motley Fool” analysis is wrong but I’m not sure SCRI International is.

[Andrew Richards]

That nugget those sites are pointing to looks like it came from Avid PR in their press release for their Q1 2012 preliminary results. We’ll need to wait for their official results to be published, but the last ones available, from last November, don’t break down revenues enough to see how “enthusiast” products compare to professional products (page 33):

The 6.0% decrease in our video products revenues for the three months ended September 30, 2011 was primarily the result of decreased revenues from our professional video-editing and, to a lesser extent, consumer video-editing product lines. These decreases were partially offset by increased revenues from our shared storage and Interplay product lines. Avid Media Composer software had strong unit sales and higher revenue, largely driven by promotions during the 2011 periods designed to encourage users of certain competitive products to switch to Avid Media Composer, but professional video-editing revenues were down due to decreased revenues from our hardware-based video-editing solutions. Although our recent releases of Avid Studio and Pinnacle Studio version 15 have been positively reviewed, revenues from our consumer video-editing offerings have been lower than anticipated. We believe this is the result of the effects of continued economic uncertainty on consumer spending and transitional issues related to our introduction of the Avid Studio product brand. Video products revenues decreased in Europe and the Asia-Pacific region and increased in the Americas during the third quarter of 2011, compared to the same period in 2010.

The 1.6% increase in our video products revenues for the nine months ended September 30, 2011 was primarily the result of increased revenues from our shared storage and Interplay product lines, compared to the same period in 2010, partially offset by the decreased revenues from our professional video-editing and consumer video-editing product lines as discussed above. Video products revenues increased in the Americas and decreased slightly in Europe and the Asia-Pacific region during the first nine months of 2011, compared to the same period in 2010.

Best,
Andy

[Craig Seeman]

[Phil Hoppes] “I know Walt Biscardi is very heavily invested in both is legacy and support of lots of tape broadcast customers and for him and other of that need, MC appears to be clearly the choice. For those that don’t I see a whole lot more options.”

I can’t help but think you may be correct in your analysis. I suspect the misapplied “creative enthusiast” is really the Media Composer market. I think this is why Avid is responding with the $999 Symphony cross grade. It’s a bit more competitive. But they may about to be slammed by Autodesk Smoke.

It may well be that companies like Biscardi are not buying Avid hardware and if Avid isn’t making a profit on MC/Symphony (and what about DS?) then they’re still a sinking ship. I know the disdain for analogies but are they the modern CMX?

[Craig Seeman]

I’ve read a few reports that FCPX is impacting Avid. It may well be that at $299, FCPX is having a negative impact on Avid’s consumer products (please let’s not get into pro v consumer). This certainly would make sense of Avid’s entry into the iPad NLE market.

As far as software “Pro” NLE is concerned, CS6 and Smoke (given what some anticipate) may hurt them going forward, hence the preemptive move with Symphony pricing (which may not be enough).

It may be that in “cost conscious” markets Avid isn’t doing well given the above. We’ll know more at the end of the month but I can’t see how there’s much positive spin that can come out of this.

[Joseph W. bourke]

My thoughts on AVID, which are only based on my experience, and the knowledge of how our company (Hearst Television, Inc.) was dealt with by AVID, are that AVID, through their long-running attitude toward the customer, soured the market in a big way.

When the company (28 television stations nation-wide) bought into AVID, they were told all sorts of half truths about how the technology would work in a broadcast situation; that the SD Newscutter systems were perfectly fine for doing commercial production and long-form production, that the SD would shortly be upgradeable via an add-in card to give us HD, and that the Unity system would ensure that if one of the NLEs had a problem, that everything would stay up and running. We quickly realized that the software required an extended (and expensive) period of training (since nothing was remotely intuitive), that the average spot now took about three times longer to cut, and that the Unity system, when there was a crash, would spend sometimes days re-indexing all of the thousands of clips on our system, shutting down all of our edit bays. Add to that that the HD card never transpired, and you can see that, after the honeymoon was over, Hearst quickly started looking around for an alternative – which was Adobe’s Creative Suite.

We had already standardized on Photoshop and After Effects (after being a Combustion and Edit* house for a several years), so it wasn’t much of a reach to add an “experimental” station of CS3. This proved to be AVID’s downfall, since our commercial production workflow quickly ran circles around the AVID, and the Newscutters were quickly relegated to being capture stations. Once our experimental seat proved hugely successful, it wasn’t long before the Hearst corporate engineers started flocking in to see what we were doing. They quickly realized the cost savings they could achieve in 28 stations, and started meeting with Adobe, to make sure that our ENPS and MOS systems could be made functional. Once they saw that Adobe was willing and able to achieve this, they jumped on board. Hearst is now tight with Adobe, and AVID is just a fading smudge in the Hearst workflow history:

https://www.adobe.com/cfusion/showcase/index.cfm?event=casestudydetail&casestudyid=1097986&loc=en_us

I would not be at all surprised if this same experience was common in the industry. AVIDs “we’re the only real NLE” attitude and lack of listening to their customers (which has changed now – but maybe too late) soured the market, especially for the “big iron” products, which were AVIDs financial mainstay. Just my experience – yours may have varied.

Joe Bourke
Owner/Creative Director
Bourke Media
http://www.bourkemedia.com