Avid, the makers of Pro Tools, announced their financial results for 2015 on March 15th, in their 2015 Q4 earnings call. At this point we expect many of those reading to glaze over, but the results give us a clearer picture of what to expect from Avid in the future.
Total net revenues for 2015 were $505m compared to 2014 where total net revenues were $530m, so down some $25m. However taking a closer look at the numbers and how that was reached we see a that products declined from $378m to $336m but services revenue increased from $151m to $169m.
Whilst the gains in services were not enough to make up the deficit in product revenue they do indicate where Avid is hoping to start creating revenue and that's in services. These are things like subscription plans, support contracts and cloud storage income.
In much the same way that Adobe have proved there is a lot of money to be made from a subscription based model built around their core software products, Avid are hoping to capitalize in the same way. In some ways it is the best move Avid can make, with a market saturated with hardware, much of it better and costing less from their competitors, then Avid need to concentrate on their strongest assets, that is core products like Pro Tools and their media storage and distribution which has a proven track record and used by many leading broadcasters around the world. Pro Tools 12.5 cloud collaboration is part of that plan, we'll have more on Pro Tools 12.5 cloud collaboration in the coming weeks.
We want to be clear, we are not saying Avid will stop making hardware, but we believe that they will simply place less reliance on that part of their business, instead concentrating on growing a core business around a regular stream of income from their core customers in music and post using products like Pro Tools and Media Composer and hoping to get them buying into services that guarantee a regular income stream for Avid.