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An Analysis Of The Future For Avid As A Business

In an article entitled “Will Accounting Woes at Avid Spark Big Changes or an Acquisition?”, Chris Potter on Screenlight analyses a future for Avid. Its a detailed article so I am not going to reproduce it here, but one highlight was this comment…

Avid could try to invest in significant new product development and new product categories. I think efforts to do this could be hampered by the following:

  • It has limited cash to invest in new product development.

  • The time horizon for incubating new products in-house is relatively long.

  • It has limited financial resources to make acquisitions that would deliver material results quickly.

With this strategy, my first thought was that Avid could round out its suite of editing tools. However, professional video editing only represented 11% of revenue in 2011 (down from 13% in 2010). By contrast, storage and workflow solutions represented 21% of revenue in 2011, up from 16% in 2009. Given the growth in this segment, I suspect that Avid would be more likely to invest in shared storage, collaboration and asset management than anywhere else.

I was surprised Avid’s editing was such a small part of the revenue and that storage and workflow is growing but if you consider the cost of products like ISIS then perhaps it isn’t so surprising.

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