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Avid’s metamorphoses:Growing pains dog firm

Hollywood isn’t quite so avid as it once was about Avid Technology.

“This is a romance that went bust,” contends film editor Richard Marks, currently using an Avid to cut “Old Friends” for TriStar. “Avid has certainly missed some opportunities. Whether they’ve missed the boat altogether remains to be seen.”

Marks is just one of several Hollywood editors who have become disenchanted with a product that once mesmer-ized them. Gone today is enthusiastic talk of speeded-up post-production on the nonlinear, random-access elec-tronic edit systems that Avid makes. Instead, editors and equipment owners here seem to feel betrayed by an East Coast corporation that doesn’t listen to their complaints of buggy software, expensive upgrades, a poorly trained tech-support staff and a difficult-to-negotiate interface with audio post-production systems.

In addition to these tangible problems, editors complain that they generally feel ignored by the Massachusetts-based Avid, which, they say, likes to brag about its toehold in Hollywood, but is reluctant to invest in entertainment research and development. By assigning more engineers and other staff to technical issues affecting Hollywood customers, the editors say, Avid could directly address questions pertaining to what is probably its most demanding group of users.

Cutting back

Many editors cite the loss of three senior staffers at Avid’s Burbank office — two resigned and the third was laid off — as evidence that the company is losing touch with Hollywood.

Avid VP of marketing Jim Ricotta counters that editors shouldn’t worry that Avid is distancing itself from Holly-wood simply because three employees are no longer with the Burbank office.

“We restructured our sales force so we could spend more time on accounts from Hollywood,” he says. “We realize that we’re in Boston while a lot of our most important customers are in Hollywood, so there may be a perception that we’re not really grounded yet in the Burbank office. But we’ve formed two advisory councils for the Hollywood area, one for directors and editors, the other for businesspeople. We think it’s a more organized way of getting customer feedback as we go forward.”

Some editors suggest that Avid and its closest competitor, Lightworks, risk losing ground in Hollywood. So far, only a system called Media 100 is making even a minor dent in the market share enjoyed by Avid and, to a lesser extent, Lightworks.

But, says Marks, “There are upstart companies waiting in the wings who will take computer editing to the next level. They probably think there’s no room for them in the market, but they should be aware there are a lot of un-happy people here, and there’s a niche to be filled.”

Financial analysts agree that Avid isn’t bulletproof in the nonlinear editing market. While newer systems are currently in development for the lower end, they will likely be improved, and could eventually migrate up to high-end use.

“I’m keeping my eye on Macromedia,” says Hany Nada, VP and senior technology analyst at Piper Jaffray. “They’ve developed a product with Media 100 and True Vision that will probably be called Final Cut. It’ll compete at the low end of the market with Avid’s new product, MCXpress, which is doing relatively well as a low-end solution.”

Exciting technology

Since electronic editing sneaked up onto Hollywood’s radar screen around 1990, directors and editors have waxed ecstatic about the ability to move images around with a greater ease than is possible using traditional film cutting.

Avid, which makes nonlinear electronic editing systems and other digital gear, was founded in 1987. Today, about 85% of film-originated primetime TV shows are cut using the Avid, and about 425 feature films thus far have been edited on the system. It is the world’s most widely used device for editing various forms of video and audio media. Its system is based on Macintosh technology, and its user-friendliness appeals to many who are just learning to edit electronically.

In Hollywood these days, editors view Avid as a company that’s floundering in several areas. Hollywood business accounts for about one quarter of Avid’s total revenues, while commercials, corporate videos and other miscellane-ous post categories make up the bulk of income. That fact hasn’t escaped the attention of many in the entertainment industry who say that Avid is concentrating its efforts on market segments that could deliver larger revenue streams.

Focus on upgrades

“The feeling of Avid’s field reps is: The company has reached the saturation point in Hollywood, meaning the film and TV market,” says one observer. “A lot of the sales now are focused on upgrades, so instead of selling a new system for $70,000, you’re selling upgrades for $20,000. So your volume drops, while your overhead stays the same.”

Avid’s Ricotta disputes this contention, saying that the company is making a big push into online editing for television. “It makes no sense to say the market is saturated. We see huge growth potential in Hollywood. Right now, 85% of online editing for episodic shows is done on digital Betacam or D2 (digital videotape). That represents a big opportunity for Avid to expand in the market.”

Hollywood users have set their critical sights on Avid because the company has been so successful in this market, compared to its competitors. It’s estimated that there are about 2,000 of the company’s workstations in Hollywood. Of the many nonlinear edit systems that have been introduced over the years, only two, Avid and Lightworks, sur-vived to garner sizable market share in the feature film and TV markets. Relegated to memory are names like Edit-ing Machines Corp., Ediflex, E-Pix, Montage and ImMix.

Though many of the recent complaints have been aimed at Avid, editors guild president Donn Cambern is careful to say concerns aren’t just limited to that company: “Avid, without question, is the market leader. But both Avid and Lightworks have gotten complaints about user dissatisfaction. People have lost their initial enthusiasm because they find themselves in a position of having to do ‘work-arounds.’ That’s the phrase that’s used everywhere, since it’s so common that people have to work around problems in these systems. It slows down the process and is ex-tremely frustrating.”

Both Avid and Lightworks, Cambern says, suffer from the “work-around” problem.

Call for improvements

But at least for the moment, Hollywood’s cutters have focused their attention on getting Avid to make some improvements. Piper Jaffray’s Nada says the long-term prospects for Avid look good, but for the moment, its overall market growth has stalled. The company has suffered a reversal of fortune in the financial markets, its stock tumbling from a 52-week high of $26 last May to about $11, where it’s held steady since the beginning of this year. Nada attributes much of the slide to product diversification that hasn’t panned out well in the market.

“It’ll take time for the financial strength of the company to return. I don’t think Avid will go back to its glory days in the near term, but I continue to believe Avid will be a force in the nonlinear editing market.”

And even those who candidly express reservations about Avid’s current approach to Hollywood acknowledge that the company’s system is still tops. “I love the Avid machine,” says Marks. “All I want from Avid is for them to serve us as an industry better than they have.”

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