Rumours have been swirling for some weeks now about a possible sale of Avid, the makers of Pro Tools. We consider what it could mean for Pro Tools users?

Business As Usual

One option for a proposed investor is to let things continue as the are. Avid has made great strides in the last few years when it comes to making money.

Market capitalisation, also known as market cap, is a fundamental measure used to assess the overall size and value of a publicly traded company. It is calculated by multiplying the current stock price by the total number of outstanding shares. Avid’s market cap now stands at around $1.2billions with share price now at around $27 versus the worst point when they were sometimes around $5.

One investor point of view may be to think ‘if it’s not broke then why mend it?’

Since his appointment in 2018, CEO Jeff Rosica, has done great work on building Avid’s products, reputation and fortune. Any new investor may consider the current strategy, management and products to be the best way to grow the company. This is sometimes the case with business takeovers, an investor sees that the best strategy is to leave things alone. If this is the case, then we think Pro Tools users will experience very little difference in terms of products, pricing and service.

Less Innovation, More Discounts

One of the rumoured investors is Francisco Partners. That name might ring a bell for some because it’s the investment company who purchased iZotope and Native Instruments in 2021 to create the Soundwide Group. Later on they also acquired Plugin Alliance as part of the group.

So what has happened since that time?

iZotope and Plugin Alliance are two of the last companies to port AAX plugins to Apple Silicon. Historically we would have expected them to be at the front of the race. Some significant individuals have left NI and iZotope since the purchase and merger, people like Jonathan Bailey, who was until the purchase, in a significant product leadership position at iZotope, most notably with products like RX. He left within a year.

iZotope were once considered the leaders in technological audio innovation, especially when it comes to sound restoration, iZotope RX has always been considered the gold standard when it comes to fixing audio. However, the last few releases, although touted as major upgrades, have been considered by those who know the product well, even Mike (Mr RX) Thornton, as point upgrades with little headline features and innovation, making them a less attractive value proposition. iZotope also created a lot of badwill after allowing the Exponential Audio range to fade away, rather than making investment into the product line. Audio professionals have been unimpressed by iZotope’s stewardship of the Exponential Audio brand, which is now a shadow of it’s former self, once considered the leading reverb brand under the sterwardship of founder Michael Carnes, paticularly in post-production.

In both regards these decisions have allowed other companies to take market share from iZotope; developers like Waves, Acon Digital, and Accentize are now being regarded as serious brands in the sound restoration space. Companies like LiquidSonics and Valhalla are making big in-roads into the reverb space, with LiquidSonics now the reverb of choice in post production.

Professionals want consistency and reliabilty, they are buying products as tools and as an investment, so they need to be able to trust that they can use them in the future and that those products will be updated and supported in a timely manner.

At the same time, there has been an almost relentless push to discount products. There’s almost a new sale on a monthly basis, making the idea of sales almost meaningless.

There has of course, and to be expected in any investment led business, a push to move to the SaaS model. The Software-as-a-Service (SaaS) model is a method of delivering software applications over the internet on a subscription basis. In this model, instead of purchasing and installing software on individual computers, users access the software through a web browser, usually paying a monthly or annual fee. SaaS offers several benefits for software companies. Firstly, it allows them to provide continual updates and improvements to their software without the need for users to manually install updates, this of course is a theoritical proposition and isn’t always the experience of the subscriber. Secondly, the subscription-based pricing structure provides a steady and predictable revenue stream for the company.

Given that Avid has already employed the SaaS model, then in this scenario expect more of the same. Subscriptions would remain and possibly be leveraged to a greater extent. Discounts may be employed to get cash into the business, although Avid also sells hardware as well as software, and some of it has a significant price tag, it may not be as easy to discount products en masse. Avid also has a dealer and distribution channel around the world, so discounting can be problematic and disrupt those channels. Dealers are an essential part of a professional product eco-system. It’s not easy to sell and commission an Avid S6 over the internet.

The Most Likely Outcome

Given that Avid is a different beast to the Soundwide Project, both in terms of product and market, unless the new investors were insane, we would expect them to run Avid as business as usual.

Avid has industry standard professional products used in most of the top music and post facilites on the planet. They also have a huge reach into picture for TV and Film with Avid Media Composer and associated products, as well as a lot of influence in the broadcast space. Avid is not a bunch of plugin companies, it’s a complex eco-system that the professional media sector depends on.

For anyone to try and make any major shifts would have huge implications, and quite possibly be the catalyst to start a shift away from Pro Tools being the industry standard. How ironic if this were the case, but it wouldn’t be the first time a large brand has done the job of their competitors for them.

What Avid customers need is stability.

If a sale does go ahead then it will take months for any new strategy to become clear. Our advice to Avid customers for now is to watch this space, business as usual. Certainly don’t make any decisions based on a few headlines about a possible sale, it won’t affect Pro Tools users for the forseeable future.