Autodesk buys SoftImage for $35m (7)
SoftImage announced this week that they were acquired by Autodesk for $35 million.
Autodesk is a leading 3D software company, makers of acclaimed 3D modeling packages such as AutoCAD (industrial design, architecture, engineering), 3DS Max (video games, video CG effects), Maya (open architecture, used in video CG).
On the other hand, SoftImage’s leading product is XSI, a popular 3D graphics software mainly used in special effects (for the special effects in Star Wars, Jurrasic Park or more recently creating the environment and lighting in the movie 300). They also have a strong foothold in education.
Autodesk is based in San Rafael, CA, while SoftImage is a Montreal company.
One troubling thing in this acquisition is the price paid by SoftImage. The same company was bought by Microsoft in 1994 for $130 million, then was bought by Avid from Microsoft for $285 million in 1998. The difference makes it look like a firesale price, as if Avid did destroy SoftImage’s value 8 fold in a timelapse of 10 years.
Admittedly, SoftImage had back then a star product, DS, the first and only non-linear video-editing suite. DS and the other video editing software has been Avid’s cash cow for the past 10 years, but they didn’t bring any further innovation. Video professionals know now the rest of the story, with the breakthrough of Apple’s Final Cut. Avid announced DS was not part of the deal, and the sale of SoftImage is a strategic move, with the goal on refocusing on their core business (movie editing). Of course, it also brings them cash in hard times.
One can’t help to imagine what would happen if DS was still in the hands of SoftImage and if they had kept working on it and bringing new innovations. Who knows, maybe it could have been a multi-billion dollar company now.
The price reflects the natural decrease in the 3D animation software business. In 1994 the business was growing strong as movie makers, video games and advertisers where buying new 3D licenses. Now the industry is mature and the growth is no longer there.
In 1998 Avid saw a competitive threat in DS to their cash cow (Media Composer) and bought Softimage. Now the industry is further consolidating with 3D animation at Autodesk and Video Editing at Avid.
It is interesting to think what would have happened if Softimage had remained independent. But it is very hard to upstage an entrenched standard (Media Composer). Just look at Open Office vs. Microsoft Office. You need to be at least 10x better than the standard before anyone will move. DS is good, but it is not that good. Further, if a price war had started both companies would have suffered.
Peter,
“Now the industry is mature and the growth is no longer there.” I don’t think companies bought 3D software in 1994 and stopped buying any license? I thought there were more video games studios and FX studios in 2008 compared to 1994?
Also about DS vs Media Composer, I still think Softimage had an opportunity to be a leader
I don’t think there’s anything like a decrease in the 3d business - if you look at the annual profit increases for Autodesk over the last decade, you’re looking at explosive growth for a mature company.
Avid, however, have really been struggling financially and as the article quite rightly points out this was a strategic refocusing of the core business, I discuss it further here:
http://www.cgenie.net/cgenie-content/articles/autodesk-friend-or-foe.html
Thanks for link Katie,
I didn’t think Autodesk was the 2nd oldest software company, and now growing faster than even Microsoft.
about the price: so it’s definetely a firesale price then? As Avid is losing a lot of money
[...] SoftImage was acquired by Autodesk for $35 million. [...]
great reporting here, heri
Thanks ali
Leave a Reply