Tag Archives: Adobe

The death of big broadcast iron

gearsIABM DC releaed its 2016 Global Market Valuation and Strategy Report February 24, and the news for media technology companies was not good. Overall spending for media technology products and services was down 4.3% year over year. The report also noted that product revenues have been in decline since 2012, but this is the first year since the report shows a decline in services spending as well.

Much of the decline can be attributed to disruption from the bottom of the market. What were previously considered lower end tools, such as Adobe Premiere Pro in editing and Axle in asset management have matured a surprisingly brisk pace and have proven themselves ready for prime time.

Technology disruption also plays a part in the overall decline. As IP-video takes hold, the need for satellite links can be replaced by bonded 4G connectivity. “@Home” production of live sports is also lessening the demand for infrastructure. A sign of things to come is Boston-based NESN (MLB Red Sox and NHL Bruins) and LiveU’s announcement in December that portends the demise of the OB truck.

The network will utilize multiple cameras feeding back to NESN’s Boston-area studios via bonded cellular technology.

NESN plans to use multiple LU500 portable transmission units to pilot live “@Home Productions” on the majority of Red Sox home and road spring training Games in 2016 as part of a new innovation and business model for sports coverage. NESN and LiveU successfully developed and tested this new means of remote event coverage last spring during Red Sox Grapefruit League games in Florida and during the summer from minor league baseball AAA Red Sox games in Pawtucket, Rhode Island.

If the experiments continue to show progress by the 2018 season these major market franchises might be leaving the heavy iron in the garage. Be assured, sports broadcasters throughout North America are watching this closely as they begin their own cost-cutting efforts.

There’s a case to be made that the news is not as bad as it seems for the larger media tech players such as Avid, EVS, and Belden (Grass Valley). Budget pressures are spurring consolidation of independent broadcasters. These large station groups are likely to settle on a single vendor in each product category. Though the industry is notoriously conservative, all it takes is one disruptor to win a deal to get everybody looking at the new, more cost effective solution. Over the past year there has been a perceptible uptick interest in connecting the Adobe Creative Cloud tools to existing shared storage and asset management infrastructure.

Adobe Creative Cloud Market Size 2018 (projected)

Adobe’s estimated Creative Cloud 2018 revenue projections by segment ©2015 Adobe

Though it’s difficult to extrapolate media technology spend from Adobe’s reported growth in enterprise term licenses, Adobe has pinned much of the growth in Creative Cloud adoption of enterprise term license agreements (ETLAs). These licenses typically have a 36 month term with each customer, giving competitors a very small window once every three years to make a play to convert the enterprise to its solution. Adobe is projecting success in the enterprise, projecting $3.8 billion in recurring revenue from Creative Cloud for teams and enterprise by 2018.

Adobe has been well-rewarded for its brave decision to migrate all Creative Cloud customers to a subscription model, but it will run into some headwinds among some of the large station groups. As one station group executive told me, “Everyone thinks we’re eager to jump to OPEX from CAPEX with our technology spend, but that’s not true. We’re focused on keeping OPEX down.” In a consolidating industry, acquisitions are funded by stock transfers. Share price is tied to operating margins, hence the desire to keep OPEX down. Offering a choice between SaaS and perpetual license models, Avid should be able to maintain its current position, and perhaps grow it, in the station group segment.

Consolidation won’t last forever. There are a finite number of independent broadcast stations remaining ripe for purchase, and nobody is launching new ones. What we’re seeing is similar to the consolidation of newspapers during the 1990s in the early years of this century. As customer bases shrink and profits sink, cost cutting through consolidation takes hold throughout a market segment. No one was buying up newspapers for the long haul.

There is one significant difference between broadcasters and their newspaper cousins that makes a broadcast station a better long term investment. Spectrum, a finite resource. Its value will increase over time. Broadcasters aren’t in the broadcast business as much as they are in the spectrum investment business.

The place to be in media technology these days is IP-based video cloud-based SaaS offerings that multi-platform and OTT delivery. The days of big iron in broadcast, like the days of big iron in post are over.

Adobe releases DRM for Flash

In case you have any doubt Adobe is serious about dominating the web video space, this from StreamingMedia.com:

Adobe today announced the availability of its Flash Media Rights Management Server, a product that runs on Windows Server 2003 and Red Hat Linux and offers content protection and business rules for playback and repurposing of offline content.

The Rights Management Server is designed to sit alongside the Flash Media Streaming Server or Flash Media Interactive Server and protect streaming content. The company is positioning Adobe Flash Media Rights Management Server as a way to “protect and controls media content downloaded in FLV (Spark or VP6 codec) or MPEG4 (H.264 codec) format and played back on local desktop.

The full press release from Adobe is here. DRM for offline content isn’t new. Apple implements it with every music purchase, but Adobe’s approach gives the content holder more options. The DRM can be as restrictive as the content owner wants. Maybe reports of DRM’s demise are premature.

After Effects CS3 8.0.2 update available

After Effects logoThe awaited 8.02 update for Adobe After Effects is now available for download for Mac OS X and Windows, and through the Adobe Update Manager. It’s been my experience that the process goes a lot faster with the manual download.Support for direct P2 import into After Effects has been added. Mac users get Leopard compatibility.Originally the update was going to address issues with QuickTime 7.4, but the update was released without the QT fix. Adobe continues to recommend CS 3 users do not update to QuickTime 7.4. Known issues include failure to render files that take longer than 10 minutes to render.Some work arounds include rendering still image sequences and then piecing them back together in QuickTime Pro, or downgrading (just like the PCs do in those ads) to QuickTime 7.3 using Pacifist.No word on when a QuickTime 7.4 fix will be released.

ADDED January 25:

Cringley’s wedding bells: Apple and Adobe

Cringley’s always a good read, often a good chuckle. Today he posits Apple will buy Adobe. Great headline, but not likely. Cringley likes to write about Steve and Bill, and his other schoolyard chums, but those guys still have to answer to their boards. And why would Apple’s board want Adobe?

Adobe’s stock has been flat for two years. It’s quite possible its core content creation market is near saturation. The margins on software upgrades are nothing like the margins on new licenses.

Adobe’s a smart company. It will do fine as it reinvents itself. That’s why Adobe’s going into the IP video space (Adobe Media Player) and software over the web space (Buzzword) with such energy.

So let’s go to the charts. It’s apparent that Apple is on a roll, and that if it had $20+ billion in spare change, that it would likely want to buy the next big thing, rather than the last big thing. I’m not saying that Adobe’s best days are necessarily behind it, but Apple could surely find something cheaper with as much upside potential.

Cringley doesn’t make his case well with the old “the Mac is the dongle” argument.

Some readers may know what a dongle is. For those who don’t, a dongle is a sort of electronic key that plugs into a PC to enable the use of some expensive software application like AutoCAD. Each copy of the app comes with a single dongle so you can put the software on as many computers as you like but only one — the one with the dongle installed — can function at a time. Dongles, which are rarely used today, were an early and quite effective form of copy protection. Apple uses a variation of the dongle technique for its professional applications, but in Apple’s case the dongle IS the computer. Yes, the software is a good value but you have to buy a computer from Apple — a dongle — to run it on. So Apple runs its professional application business effectively at breakeven, making its profit on the associated hardware.

If that’s all Apple is doing with ProApps, running it at break even, then why the rumors that Apple was entertaining bids for the unit? Apple doesn’t think of itself as a computer company any more. It’s a consumer electronics and media distribution company these days (that happens to make a hell of a personal computer). iPods and iTunes sell way more Macs than Final Cut Pro. So that argument is a little thin.

In a perfect world, Apple would love to control Photoshop, Illustrator, InDesign, After Effects, and Flash. But it’s highly unlikely it will pay all that money to do so. Does it really want to support all those enterprise clients with Acrobat?Interesting read, but I’m confident Adobe will remain independent for some time to come. I think it’s more likely Adobe would buy ProApps.

Adobe CEO steps down

From the Wall Street Journal:

Adobe Systems Inc. announced a surprise change to its top leadership at a critical time, as the software maker begins to adapt to new ways that people are using the Web.

The company yesterday said Chief Executive Bruce Chizen will leave the post at the end of this month, to be replaced Dec. 1 by Shantanu Narayen, currently Adobe’s president and chief operating officer. Mr. Chizen will serve the rest of his term on Adobe’s board until the spring of 2008 and will act as an adviser to the company until Nov. 28, 2008.

The group think is that the change in leadership is a sign Adobe is trying to speed its migration from shrink wrap to web apps. As video applications and content are among the most bandwidth and resource intensive, we’ll be among the last to see the fruits of such an endeavor.

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