It looks like Avid Technology are changing their strategy. The old strategy was described in a May 2015 video (no need to enter your information just click ‘Submit’ to see the video): get larger proportions of what they call Tier 2 and Tier 3 markets -The $3.1bn business and institutions market and the $1.8bn individual creatives market.

Now they are talking about capturing more of the workflow in Tier 1. CEO Louis Hernandez Jr. appeared on CNBC’s Mad Money show with Jim Cramer:

Avid’s behind some of the largest media companies” … “A hugely influential player in 140 countries around the world

Avid editors…

will earn 44% higher than any other editor over their lifetime

[2:03] He refers to Media Composer and ProTools as ‘Heritage’ products. As there is much more to workflow than editing and mixing, Avid has had to build on those tools to “…participate in the rest of the workflow”

[3:10]

These transformations are never that easy […] We are surging in cloud subscriptions and large enterprise deployments

He said that they previously announced that their transformation would be over in Q2 2017, but they discovered they had to restate 8 years of financial results. The upside of being delisted was that although the transformation was delayed, they were able to more quickly make the investments they needed to transform the way they planned to, so they are still on track.

[4:18]

We’ve said the end of this transformation is 2017, mid-year. You’re starting to see with every given quarter real progress. You’ve seen platform sales up last quarter from quarter to quarter of 47%. You’ve seen 4 times growth on our cloud-based subscriptions and more to come

He later said that NBC needed to make a transition to digital economically, and was able to do so using Avid Technology technology.

I’ll leave it to Avid users themselves to determine whether recent surges in ‘cloud-based subscriptions’ were from new users or from those changing the way they already paid for Media Composer and ProTools.

My guess: they are hoping for an acquisition. Who would be a good fit? If you believe in Avid’s strategy, one that has products and services that complement the aim to provide solutions for the whole workflow at the high end. This means that Avid doesn’t like the idea of selling Media Composer to someone else, even if there’s almost no chance that it can be anywhere near as profitable as the audio side.

I wonder whether investors have a way of measuring how successful Avid’s new strategy is successful. I’d be surprised if the results of the previous one were going to look very good.