Reel battle

Avid Technology aims to stay dominant in video editing as Apple nips at its heels

Visual artist Maurice Methot still has fond memories of the video editing software he once used - Media Composer, the flagship product of Avid Technology Inc. in Tewksbury. "It was a beautiful tool," Methot said. "It was rock-solid."

But Methot, associate professor of visual and media arts at Emerson College in Boston, hasn't touched Media Composer in years, and neither do the students in his classes. He teaches video editing with Final Cut Pro, a program created by Apple Inc. that's become a major rival to Media Composer.

"The investment to get into a Final Cut system seems to be quite a bit less than even a low-end Avid," said Methot. Yet Final Cut Pro is so good, it's used to edit major Hollywood films like this year's Oscar winner, "No Country For Old Men."

The corporate graveyards of Massachusetts are full of tech giants laid low by upstart rivals - Digital Equipment Corp., Wang Labs, Polaroid. While Avid's condition isn't nearly as dire, the warning signs are plentiful. Revenues in the company's high-end video business declined by 4 percent in 2007, and the company posted an annual loss - its second in a row. Avid stock reached nearly $67 in early 2005; currently, it hovers around $25.

But Avid isn't waiting around for things to get worse. With a new chief executive at the helm, the company is slashing prices, upgrading customer service, and overhauling its product line. Avid's new chief executive, Gary Greenfield, who came on board in December, is determined to maintain his company's dominance in high-end video editing and to generate profits from Avid's recent foray into video products for consumers. "It's our responsibility as a company to help our customers be more successful," Greenfield said.

Major film and TV companies worldwide still swear by Avid products. According to the research firm, Frost & Sullivan, Avid is the leader in digital video editing for movies and TV shows. The company is also a major force in editing gear for live TV productions like news shows.

"We use strictly Avid here," said David Kaylor, director of engineering at WCVB-TV (Channel 5) in Needham. Over the past two years, WCVB has begun producing more of its shows in high-definition video. The company bought several new Avid servers and a massive storage system to handle the much larger video files generated by HDTV. Kaylor said that he's considered using Apple software, but that, while Apple makes good individual products, it can't provide a complete video-editing and storage system like Avid. "I wouldn't know where to go from Avid," Kaylor said.

But some Avid loyalists have been swayed by the low cost and simplicity of Final Cut Pro. "We have one Final Cut Pro system here that we use," said Greg Roehr, chief engineer at New England Cable News in Newton. He remains committed to Avid products, saying they're better suited to heavy-duty video production. But Roehr warned that in the long run, "price is going to rule the day. This sort of system is going to become a commodity."

Greenfield understands the threat. "Final Cut is a terrific product," he said. And with a price tag of $1,300, it's an attractive alternative to Avid's more costly Media Composer.

Last month, Avid struck back by slashing the price of Media Composer from $5,000 to $2,500. Perhaps more significantly, Avid introduced an academic version, available to college students for just $295. Final Cut Pro is hugely popular in college video-editing courses, and Avid's academic pricing is a bid to ensure that the editors of the future are comfortable with Avid software as well.

Greenfield acknowledges that Avid has been losing touch with its core market of video professionals. "Our users have said we haven't spent enough time with them," he said. So, in his first three months on the job, Greenfield has visited with more than 60 of the company's biggest customers. Avid also has launched a major customer-service upgrade. Its enhanced community website features blogs, tutorials, and a place where customers can upload their own videos and get advice on how to improve them.

Meanwhile, Avid's also eager to capitalize on the surging popularity of amateur video production. In 2005, the company spent $462 million to acquire Pinnacle Systems, the leading maker of home video editing software. Yet Greenfield acknowledged that Avid is only breaking even in its home video business, and revenue in that segment declined slightly last year.

Now Avid is trying to drum up business with VideoSpin, a free download that contains many features of the company's $129 Pinnacle Studio editing suite. "We've constructed it specifically to make these four-minute videos for the Internet," said Avid's chief marketing officer, Greg Estes. Avid hopes VideoSpin's attractive but limited features will entice serious amateurs into buying the full product.

Avid also has high hopes for Pinnacle's portable video products. The company's line of HD Stick devices lets users transfer cable or broadcast TV onto a desktop computer. One HD Stick model can record up to two hours of video, which can then be viewed by plugging the device into any computer's USB port.

Ironically, Avid's least-known business is also its healthiest. The company is a leader in professional-grade audio as well as video. Avid makes microphones, mixing boards, audio-processing workstations, and, of course, the software to run them. Last year, while professional and amateur video revenues were shrinking, Avid's audio business grew by 4.5 percent.

Still, Estes said, "the professional video side is really the anchor of our business," and Avid's future depends on its success at fending off potent rivals like Apple. "We don't have our head in the sand."

Hiawatha Bray can be reached at bray@globe.com.