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Innovation economy

Can Avid make a comeback?

Films that used software from Burlington-based Avid Technology include “Captain Phillips,” “American Hustle,” “Gravity,” and “12 Years a Slave.”

Few Boston tech companies cut as glamorous a profile as Avid Technology of Burlington. In the 1990s, the company won both an Oscar and an Emmy for changing the way movies and TV shows are edited, ending the days of splicing film and ushering the entertainment industry into the digital era.

Avid followed with success in the music business: Its software mixed seven of this year’s Grammy-winning albums, by acts such as Bruno Mars and Daft Punk.

But lately, Avid has been livin’ la vida Lohan. The company’s stock is down about 85 percent over the past decade. It replaced its chief executive in 2013, and in February, Avid was booted from the Nasdaq market for failing to file timely financial statements. The company had $48 million in cash at the end of last year and will spend at least half that to straighten out the accounting problems that led to its delisting by Nasdaq.

This week, Avid is in Vegas for the annual convention of the broadcasting industry, trying to pull off a reinvention in front of its most loyal customers. What happened to this onetime wunderkind?


Avid was born in the 1980s, when Route 128 was still “America’s Technology Highway.” Founder Bill Warner was working at Apollo Computer, which made powerful (for the time) computer workstations, and he was intrigued by the possibility that Apollo’s workstation could digitize, organize, and edit video, simplifying a time-consuming process. Executives at Apollo didn’t want Warner to pursue the project, so in the summer of 1987, he quit to start Avid, raising $500,000 from a local venture capital firm, Greylock Partners.

Before long, the people who edited TV commercials, music videos, news segments, and movie trailers were using Avid’s product, which initially ran on Apple computers. It triumphed over a rival system developed by director George Lucas, called the EditDroid, and many other competitors. Eventually, film editors began to embrace Avid.


James Cameron bought a truckload of Avid systems and installed them in a guest house on his property to wrangle all the film shot for the 1997 movie “Titanic.” (It won 11 Oscars, including Best Film Editing.) In 1999, Warner and his Avid colleagues were awarded an Oscar of their own.

The company had fantastic profit margins. “In the early days, we were selling customers the hardware, software, and storage, too,” says Mark Overington, who was Avid’s fifth employee but now works at another video company, Aframe. “The average price tag for a system was $110,000.”

Avid was a market leader, and could basically dictate prices, observes another ex-Avid executive, Tom Ohanian. Along the way, the company branched into sound recording, acquiring California-based Digidesign, which makes Pro Tools software used to record and mix albums.

Avid also saw that lots of normals — people who weren’t professional TV editors or recording engineers — were going to create their own videos and music. So in 2004 and 2005, it bought two companies that made lower-end audio and video production technology, paying $635 million for the pair.

But players like Apple and Adobe Systems proved much better at marketing to consumers and small businesses, and Apple bundled software like Garage Band and iMovie with its new computers. Avid had to wave the white flag. In 2012, it exited the consumer business, selling the two companies for a combined $17 million and cutting about 350 jobs.


In the aftermath, Avid has been “forced up into the top of the pyramid,” in Overington’s words, selling to a smallish community of professionals who make movies or music for a living — or aspire to. It no longer has the power to set prices, which are driven by players like Apple and Adobe. (Avid’s Media Composer video editing software, which once sold for six figures in combination with hardware, today sells for three — $999 for Mac or PC.)

Avid was slated to bring together about 1,000 customers in Las Vegas starting Friday, in advance of the National Association of Broadcasters trade show. Chief executive Louis Hernandez Jr. told me he would use the gathering to announce a “replatforming of the company’s strategy, building on its heritage.”

What does that mean? Avid is trying to expand beyond creating media into how companies deliver it to different devices; how they customize it for different audiences; and how they track viewership and generate revenues. Hernandez said he also planned to announce “fully cloud-enabled” versions of Avid’s video editing software; instead of buying the software outright, customers can pay $50 a month for access through the Internet.

In addition, the company should soon finish cleaning up the accounting issue that got Avid kicked off Nasdaq, Hernadez says.

The former Avid executives with whom I spoke said the company is making the right moves. “It’s not too late,” says Overington. “The industry as a whole does not want to see Avid fail.”


But “Avid lives and breathes at the high end of the market,” says Steven Frankel, senior research analyst at Dougherty & Co., a Minneapolis investment bank.

“All of the growth is below them. They have happy customers they can continue to service, but it’s hard to see how they grow and prosper.”

I have to wonder if Avid will go the way of 8-track tapes — or Apollo Computer, which saw PC makers like IBM steal away much of its high-end, money-is-no-object customer base. It’s a high drama moment for the company: Is there a comeback in store, or are the credits about to roll?

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.