Media 100 is selling off its line of video creation, editing and encoding software to focus on what it calls a next-generation platform for creating and delivering broadband media.
AutoDesk's Discreet division will purchase the line, which includes Cleaner, Cleaner Live, CineStream and EditDV, for $16 million (around £10 million) in cash. The two companies expect the deal to close sometime in September. Discreet already makes higher-end video creation and editing software and hopes the Media 100 line will help round out its offering for those looking to run Internet streaming applications.
Media 100, which just recently integrated the software line after numerous acquisitions, will use the money to fund Pegasus, its next-generation project that will be announced sometime next year. The project involves specialized hardware designed to speed up the digital media creation process. Pricing will be somewhere between £18,000 to £36,000.
The move also helps stem some of the red ink flowing out of Media 100 by improving the company's cash position to £14 million and halving operating expenses. Steve Shea, Media 100's chief financial officer, expects post-sale revenue to be about £3.5 million to £4 million. Much of the company's revenue, about £13 million, came from the software line, but slowing sales hurt.
"We started feeling the downward pressure late last year and it has continued for three solid quarters," says John Molinari, president and CEO of Media 100. The decision came down to supporting both operations or just concentrating on one. "We do believe the market for technology products will come back and that 2002 will be the best bet, but not next quarter."
The slower-than-expected adoption of streaming media also helped with the decision. "Video streaming on the Internet will need more time to germinate. Timing and the continued need for financing [makes the software line] better suited for a bigger company," Molinari says.