Business Models Pt. 2

Last week I talked about how Avid and Apple look at the editing world through different lenses. Apple sees a broad, diverse market that wants a complete post production studio in a box. Avid sees a mostly pro world that wants bulletproof solutions with good support and is willing to buy many interlocking applications to get it.

Avid has lots of problems right now, not the least of which is it’s relatively low stock price. Many of its recent initiatives haven’t worked out as planned. Adrenaline offered great real-time capabilities when it was introduced four years ago, but it’s been persistently buggy. Xpress Studio was supposed to compete with the Final Cut suite but it was based on Xpress, wasn’t available on Mac and its marketing was lackluster. Avid bought Pinnacle to get into consumer editing but it turned out that the price was too high and the Pinnacle products weren’t all that good. Interplay has had a mixed reaction in the marketplace and only appeals to the biggest customers.

The question now is what the company’s strategy is going to look like going forward. Is Avid going to continue to focus on large customers or are they going to go head-to-head with Apple and Adobe for the hearts and minds of editors?

I’m inclined to believe that at the end of the day, there is only one market. No independent producer wants to use a product that is shunned by professionals. And the top of the market can’t function effectively while every kid in high school and college can make movies with Final Cut in his sleep. I’m cautiously hopeful that we’ll see a renewed development effort at Avid in the coming months. But only time will tell.

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10 Comments on “Business Models Pt. 2”

  1. DKG Says:

    Avid Needs to wake up if it wants to be in business in 10 years. Just about every high school and college student is learning Final Cut Pro. And not just the film majors! Students in communications related fields want to learn editing as well. At this point I see Avid continuing because of what is “was,” the industry standard.

  2. Adam S Says:

    Avid doesn’t have to change anything to stay in business. They can keep landing large companies & news stations to pay the bills if they have to. Eventually they will wake up. Hopefully it is soon because editors like myself are tired of waiting for features that competitors have to come to avid. No one has gotten it totally right. Apple and Adobe deserve many kudos for their ideology. Hurry up Avid before you never get our business again.

  3. DKG Says:

    Adam S. Sure Avid can keep landing large companies, but in 10 years who is going to know how to operate them?

  4. jd Says:

    NAB was a perfect example of where Avid went wrong. They have way too many products (NLEs). And this makes it so they can’t innovate. The resources spent acquiring Pinnacle was a huge missed opportunity. Their efforts should have been spent on innovations in the Media Composer family to move it well beyond FCPs capabilities. I’m sure the suits on Wall Street like to think Avid is buying innovation, but that’s hardly the case. If they’re going to go that route, they should have bought Boris and built it in to MC.

    To survive Avid needs to refocus on what got them where they are today: Media Composer. It needs to get back on a world class development curve. A great place to start ( what they should have done 4years ago) is to finnaly merge Symphony and DS into one killer finnishing system.

    Okay, I can’t rant any longer on an iPhone. -more to follow.

  5. Adam S Says:

    Maybe this is a question I can ask and not be flogged for. How much more innovation can we see in MC, or in any NLE right now? We’ve got the basic tools and know how to use them. What else can they do to improve? There are things we’d all like our editing apps to do better. Is making minor tune-ups innovation? Script Sync was a great new addition to MC. Where does it go from here? Does avid open up it’s architecture to follow Apple and Adobe to allow 3rd party hardware? Do they keep it closed and lower the price to compete?

  6. Edit Says:

    Avid did want to acquire Boris, but the asking price was way too high.

  7. Norman Says:

    DKG says: Just about every high school and college student is learning Final Cut Pro. And not just the film majors!

    It is exactly the non-film majors that Avid has to worry about. Once your local church is using FCP (which they are), and when Dad or Mom is using FCP for their corporate videos (which they are) and bringing that knowledge and equipment home, and once every elementary school kid is playing with iMovie (which they are), then Avid has ceded virtually every part of the NLE market of the future.

    When Avid bought Pinnacle, I told them that what they needed to do was take that technology and pay to put it on every Dell and HP computer coming out of the factory. They should have given it away for free. (Actually, what they should have done was save the Pinnacle money and figured out how to give Xpress away for free — bundled on newly purchased machines). Apple can do it because they own the hardware, but they didn’t have to give it away. They could have charged something for it — like they do iWork. But they chose to give it away for free. And, whatever it is costing them, they are making it back big time on the FCP Suite side.

  8. AndrewK Says:

    I think one of the big hurdles Avid faces is that they make money selling NLE software in a tiered product line where as their biggest competitor (Apple) does not. Apple makes money selling hardware (which is the tiered product they protect) so they can throw in whatever they want into their NLE software suite w/o much of a care because they know it will drive hardware sales. I remember w/when FCP 3 was $999 all by itself. Now for $1299 you get FCP, DVD Studio Pro, Soundtrack Pro, Live Type, Motion, Cinema Tools and Color (which cost $25k by itself before Apple bought it). I don’t think Avid can play that game and win anymore than Apple could try and “out Dell” Dell in an attempt to gain significantly more market share w/o going bankrupt. Avid needs to play to their strengths and against Apple’s weaknesses. I think if they start “chasing” Apple feature for feature they’ll bankrupt themselves.

    -Andrew

  9. Steve Says:

    The problem is that this leads to the idea that all they can do is hold onto the high-end market and charge them a premium. I think we’re seeing that this is not a viable strategy. Volume matters. Apple will keep adding features and eventually, there is just no reason to buy an Avid — you’re getting basically the same thing, for less money in Final Cut. At the same time everybody is learning Final Cut in high school, and, as those people join the work force they go with the system they’re familiar with and that undercuts Avid’s market share, too. Avid has to compete. They can’t just hold on and hope things get better.

  10. AndrewK Says:

    I agree that Avid can’t survive by holding onto just the high-end market, but they also can’t compete head to head w/Apple in terms of who’s got the biggest suite at the lowest price. Avid became complacent and, IMO, lost the focus that got them to the top in the first place. Avid needs to “find itself” again and focus what it does better than FCP and what it can do better in the future based on FCP’s short comings. Avid needs to make itself more valuable compared to fCP. Yes, Avid may never have as low a purchase price as FCP but if they can show that they are the better value over the long haul (ex. better tools and workflow that’ll save time/money in post) they can start to slow the snowball that is their company falling down the mountain. With in reason people will pay more money for a better product, but Avid has just been sitting on it’s butt ’cause they got used to be assuming they were the better product.

    Apple used to rule the education market but became complacent and got pretty much swept by Dell. Now Apple is making a comeback by showing how their computers are a better value than the Dells even though they cost a little more up front.

    -Andrew


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