Mark, Discreet Logic is a very high-end producer of special effects tools for the film and television industry. I don't think they have ever really been a competitor to Avid, which has mainly focused on editing. True, Avid has added more special effects capabilities to its systems, but Flame and Flint from Discreet Logic are still the top choice for feature film special FX, as far as I know. I can't comment on the merits of Discreet Logic as a stock, but I will say that I don't believe the future of the post-production industry is going to be dominated by these extremely high-end, high-capability tools. Special FX and editing is already becoming more of a boutique model, where artists use a palette of many cheap software tools, each with specialized capabilities in order to get the job done.
When discussing the direction of the film/video software industry, I always use the example of New England Digital, which in the 80's dominated the digital audio community with $100K and up proprietary systems for manipulating digital audio (along with expensive "technical support" annual contracts to maintain the complex system). Eventually, NED went bankrupt as many less-capable, but much much less expensive software tools became available. Today, you can edit, sample, EQ, filter, etc. digital audio with off-the-shelf generic software tools, some costing less than $100. We are heading in the same direction with digital video/film. I believe digital video at VHS or better quality, will be on just about everyone's desktop computer very soon, perhaps within the next year or two. We'll go through another "desktop publishing" revolution, only this time, instead of cutting and pasting words, we'll cut and paste video, graphics, imagery, etc.
Avid's big ace in the hole is its software interface, the most capable and refined software in the market for professional editing. But it can't keep asking for its tens of thousands of dollars premium above the cost of the system's hardware. I suppose its possible someone like Sony might purchase Avid, but I see the value of its software dropping significantly over time. Can you imagine if Adobe Photoshop were a $20,000 piece of software? As hardware gets cheaper and it becomes easier to implement the capabilities Avid introduced, competitors will have an easier time cutting into Avid's lead.
As for options, I confess I'm too conservative to short stocks, trade futures or options.
Good Luck,
D. Kuspa |
