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The numbers don’t work out…
A lot of us at the studio here have been wondering about the financial implications of the FCPX release, and the potential loss of the Final Cut Pro market. I hadn’t seen anything posted like this, so I did some digging. I was actually really surprised by the numbers after putting them together. Going out on a limb in a few places where there are unknown factors.
This is what I’ve gathered from the sources available…
1.8 Million paid FCS3 installations worldwide (Mar ’11)
1.8 Million x $1299 retail = $2,338,200,000
That’s $2.338 Billion in potential revenue.
54 Million — OSX User Base (June ’11)
3.3% = Percentage of OSX Users with paid FCS3 licenses
Now it is very important to know the percentage of FCS3 users who are Upgrade or Academic customers at the lower price point… because obviously not every seat of the 1.8 Million base buys a full retail copy upon every release. Calculating it at the base retail to determine revenue potential is perhaps just as ridiculous as Apple selling Motion 5 (best version so far!) for $49 🙂
Not accounted for is Apple saving millions with digital distribution vs traditional mastering and packaging, nor the potential piracy market with no license key or registration required for FCPX.
Nor the lengthy(?) FCPX development cycle. Clearly not much was being tossed towards FCP since about 2007.
So the the questions are —
1. Given the neutered interface and feature set, if FCPX is indeed directed towards the core Apple Base vs the Pro User, how large is the market for someone looking to step up from iMovie, but not looking for a robust professional platform like FCP Studio, Premiere, or AVID?
2. How large is the number of former FCP Users happy with FCPX and think it fills all of their needs and diving in to make the purchase?
The FCPX retail is $299 vs $1299, or 23% of the former retail price. If you include Motion and Compressor, it’s $399 vs $1299 or 30%.
Even if we go out on a ridiculous limb and assume EVERY FCPX purchaser also buys Motion and Compressor, for FCPX to have as much revenue potential as FCS3, this would still require keeping the FCPS base AND tripling it with the paid FCPX user base.
$2.338 Billion / $399 = 5.85 Million paid users or 10.85% of ALL OSX users.
That means a little over one in ten people owning a Mac and OSX must purchase FCPX with Motion 5 and Compressor 4 to equal FCS3 revenue. If you want to look at only FCPX, then you need to pull around 13% of all OSX users.
To me, FCPX is stuck between two worlds.
With hardly a hint of high end professional FCP features still present, after four years of waiting on Apple to upgrade the platform, FCPX is obviously not ready for the 1.8 Million FCS3 user base. Hence the pro market freaking out and planning migration paths (BBC, Biscardi, like every reality TV show), my company included.
I just don’t think the hobbyist/prosumer market at $399/$299 is as large as one in ten of every OSX user, especially given that a consumer friendly option to edit video is bundled with the computer for free. Maybe I’m wrong, but it seems to me and the people I’ve asked, $399 for a person not totally serious about the trade is still a heavy “App” investment.
I’m still waiting for the official statement from Apple about updates, plugins, etc, but to my eyes, FCPX is written and designed for somebody other than a professional editor. There’s just too many inherent limitations on a core UI level, that were clear choices made by Apple and have NOTHING to do with a 1.0, for me to possibly think differently.
1 in 10 seems like very lofty adoption estimates to me for such specialized software, but maybe I’m wrong and we’re going to have a lot of budding editors in the woods! To me, it feels like Apple turning it’s back on professional editors, trying to flood the market with a half-wit program at modest price point to the iUser. A marketing machine sourced upon the golden reputation of FCP to the more casual customer. Well there goes that reputation…
But with billions potentially being hurt with FCP’s shaky position in the market, FCPX being a lame consumer-centric duck has financial implications that aren’t insignificant.
I knew FCP had a 52% market share in the market, but just wasn’t aware it was worth billions.
Any thoughts? Please point me straight if I’m missing something, I have to get back to playing with Premiere Pro.
JONATHAN DORTCH
BLACK WOLF CREATIVE -
22 Replies
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[Jonathan Dortch] “I’m still waiting for the official statement from Apple about updates, plugins, etc, but to my eyes, FCPX is written and designed for somebody other than a professional editor. There’s just too many inherent limitations on a core UI level, that were clear choices made by Apple and have NOTHING to do with a 1.0, for me to possibly think differently. “
The UI “limitations” are mostly subjective. There is very little that can be done in FCP 7 that fundamentally cannot be done in FCP X as a consequence of UI changes.
I don’t quite understand how you’ve managed to construct an elaborate argument that FCP X not being intended as a pro app makes no financial sense, but instead of causing you to switch to the position that FCP X is a pro app (that hasn’t yet had its full feature set implemented yet), you conclude Apple saw a prosumer video editing market here where there is none. Apple. The company that I think it’s safe to say after the iPhone and iPad, is better at matching products to markets than any other technology company in the world at the moment.
The explanation that fits all the available facts is that Apple shipped FCP X when they had something useful to prosumers, with the full intention of continuing to build on it until they had something useful to pros. This fits the feature set of the first release. It’s consistent with Apple’s past actions with respect to features in initial products. It explains Apple’s actions without assuming Apple doesn’t understand the needs of either the prosumer or pro markets. It makes sense of the fact that FCP X was introduced at a pro event, and is being offered as a successor to a pro app. And the only stupidity this explanation requires one to attribute attribute to the generally pretty well-run Apple is stupidity about communicating this approach to customers, which is fairly believable given Apple’s extreme culture of secrecy.
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Digital Workflow/Colorist, Nice Dissolve.You should follow me on Twitter here. Or read our blog.
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Hi
Is it 1.8 million FCS 3 users? So the droves of users still on earlier versions are additional to that?
I have 1 FCS 3 licence, but 9 previous ‘user’ licences/SNs from versions 2-6.
That whole kit and kaboodle comes to a lot more revenue to Apple than the retail price of FCS 3… -
but well – isn’t there another way to see it – we would have upgraded – for about what we’d pay for FCPX right? so they weren’t going to get 1299 a head out of us this time round – so when they built FCPX, which is as you say, in the walks like a duck talks like duck – it is consumer software, that even if they lost us, as I’m pretty sure they more or less knew they would, all they needed to replace the lost revenue from professionals is a roughly equivalent number of prosumers to enter the market – and then apple would have this new market created for itself – they’d be on new turf, like the nintendo wii or something. They must have sat down with calculations showing them how many prosumer customers they would need to generate to offset the software dying off as professional software – in that scenario they sort of only need 5% of their market to opt in to replace the upgrade cycle cash they would have got from us. thats why I think now that supermeet thing was so bogus – that wasn’t a presentation for us – they were kissing us on both cheeks – that was a presentation designed to get FCPX into the minds of the casual mac market – it was free publicity for what was going to become their new prosumer app. You’re right – Apple need to make money off this application and they don’t expect to make it from professionals, but if that upgrade stuff I just blurted up there is true – then the financial bar for success isn’t that high? Or I’m completely wrong, which wouldn’t be surprising, because my maths is usually godawful.
http://www.ogallchoir.net
promo producer/editor.grading/motion graphics -
Apple claimed 2 million FCP installations at the SuperMeet where they previewed FCPX. They did not specify current version.
Apple is in the business of selling hardware. Nothing new there. Revenue from Pro Apps is a rounding error for them. Pro Apps exist so users will have a strong incentive to drop $4,000 on a 17″ MacBook Pro or $9,000 on a 12-core Mac Pro. Those are high-margin items, probably the highest in any of Apple’s product lines. One single unit sold is good for thousands in profit. That is a market worth stoking with platform-unique software that is very resource-hungry. What you pay for Pro Apps nowadays is to cover development and marketing.
Best,
Andy RichardsVP of Product Development
Keeper Technology -
The only reason I have a Mac is to run FCP, and that’s true in parts of the BBC, the university where I work, and probably many more large facilities. You can save a lot of money not running Macs – they’re a significantly more expensive investment than a PC. So if the software isn’t there you don’t need the hardware. You could add that to your statistics
B
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Bingo.
Though in my experience the support requirements for Windows typically push the cost of ownership higher relative to Macs. But then that may be moot with Win7. I’m thinking back to Win2000 and XP…
Best,
Andy RichardsVP of Product Development
Keeper Technology -
[Chris Kenny] “The UI “limitations” are mostly subjective. There is very little that can be done in FCP 7 that fundamentally cannot be done in FCP X as a consequence of UI changes.”
Well I can expand. By limitation baked into the interface I would note
– lack of custom window layout
– lack of custom frame size
– lack of custom frame rate
– lack of preference panel
– lack of overall clip duration when trimming in timeline
– lack of Countdown Generator
– no custom scratch directory
– inability to patch together a blade slice within a clip
– inability to establish track based output for audio export
– inability to set in/out points for timeline exportI could go on… nothing is subjective about missing ability. You can do all of these things on the FCP platform since v2.0. You cannot on FCPX by choice of design. Some of these features should have been easy to include in a X1.0 if intention was to match FCP in depth and ability. I’m sure we can add OMF/XML/EDL/tapping support via pluging, but fixing most of the “missing” features requires core level re-writes to the software.
[Chris Kenny] “The company that I think it’s safe to say after the iPhone and iPad, is better at matching products to markets than any other technology company in the world at the moment.”
No argument that this the iPhone/Pad/iOs are brilliant hardware/OS and world changing things. I own both and waited in line. This is a discussion about high-end software however, and Apple hasn’t designed a significant pro-software release in a long time. Most of the current/legacy products were either purchased and re-appropriated (Shake, Color), or neutered (Aperture). There’s Motion, a very odd piece of software, but it is hardly a viable After Effects competitor and hasn’t dented the motion graphics market. I am not a heavy Logic user so I cannot speak to that platform, though I believe FCS and Logic were the only two professional products left under Apple’s wing.
[Chris Kenny] “I don’t quite understand how you’ve managed to construct an elaborate argument that FCP X not being intended as a pro app makes no financial sense, but instead of causing you to switch to the position that FCP X is a pro app”
No intention of switching position, I merely tried to indicate both sides to the argument or hypotheses floating around. My position, uniformed like all of the rest of us, is that after using the software extensively, it feels like a consumer-centric program. Beautifully designed for a very different market on many levels, at a very different price point.
[Chris Kenny] .. And the only stupidity this explanation requires one to attribute attribute to the generally pretty well-run Apple is stupidity about communicating this approach to customers, which is fairly believable given Apple’s extreme culture of secrecy.”
Like the assumption that all “missing” pro features will be added, this is an assumption that Apple intends FCPX to match FCS3’s place in the market. I was just saying to my eyes, and by looking at what was included from a design decision, that’s not clear. And that the financial implications of that decision seem strange.
100% agreement on the secrecy. To me that’s the biggest tragedy of the week so far. What has Apple gained by staying silent on FCPX and it’s intention? Professional software needs service and support, not secrecy.
JONATHAN DORTCH
BLACK WOLF CREATIVE -
[Andrew Richards] “Apple is in the business of selling hardware. Nothing new there. Revenue from Pro Apps is a rounding error for them.”
Ab-so-lutely. Also raises the question of a potentially neutered consumer-centric FCP in relation to the high end computer purchase. The marketing even shows FCP on a Macbook Pro. FCPX in no way seems directed towards the ~10K system by feature set alone.
JONATHAN DORTCH
BLACK WOLF CREATIVE -
[Andrew Richards] ” I’m thinking back to Win2000 and XP…”
OK this might require Win98 or before, but I’ve dug through some old boxes and I think I’ve found your new platform! Don’t worry about the 4GB file size limit, it will be addressed via plugin 🙂 Check out the sweet “firewire” cord.
JONATHAN DORTCH
BLACK WOLF CREATIVE -
[Jonathan Dortch] “I’m sure we can add OMF/XML/EDL/tapping support via pluging, but fixing most of the “missing” features requires core level re-writes to the software.”
To be honest, some of the items on your list are things that aren’t really all that critical for pro-level software. As far as I know, Avid Media Composer, the supposed gold standard for “serious professional editing”, also doesn’t support arbitrary frame sizes. Others, like a command to join through edits or set in/out points on the timeline, are nearly trivial fixes, not fundamental rewrites.
[Jonathan Dortch] “Like the assumption that all “missing” pro features will be added, this is an assumption that Apple intends FCPX to match FCS3’s place in the market.”
Apple has already told Pogue, Studio Daily and a couple of others reliable sources that at least the most important pro features, like multicam, video output and some means of exporting sequence data, are coming back. That and the existence of several high-end features already in FCP X would seem to make a strong case against is being (exclusively) a prosumer app.
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Digital Workflow/Colorist, Nice Dissolve.You should follow me on Twitter here. Or read our blog.
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