BERGEN, NORWAY & SAN ANTONIO—Prior to NAB we saw press notices concerning endless numbers of synergetic ‘partnerships’ between connectable vendors, then came a shock wave as Vizrt announced it had acquired NewTek in a deal minus any traces of weakness.
Both vendors were in rude R&D, technical and marketing health, with strong user bases across multiple industries, and they cited a common vision, complementary technologies and very little product duplication as three of the deal lockers.
To get behind what happened, Michael Hallén, the current president and CEO of Vizrt, who leads the new enlarged business, and Dr. Andrew Cross, president & CTO of NewTek, who assumes the role as president of R&D in the new company, talked to TV Technology sister publication, TVBEurope.
Thinking about all those Las Vegas wedding chapels and getting hitched, when did Vizrt and NewTek start dating?
“We knew each other well long before my time, and I have been heading Vizrt for nearly three years. The early dating started ahead of that,” laughs Hallén.
“I’ve lost track of how long we have been close partners and friends, but it has got to be more like four of five years. It goes back longer than most people realize,” adds Cross.
“What I have been attracted to, and we talked a lot about it when we briefed our internal people, is that our views of where the industry is going are very similar, and have always been so. We both believe in the IP transition and that software takes over the world, but we come from complementary angles. We are on the same path to the future,” continues Hallén.
Cross takes the shared view of IP and IT, computers, networks and pushing a new future for video creation further: “You can look at any market, even outside the video sector, and you can identify the long-term trends in technology. In our space there are a lot of traditional vendors that have grown up where the market was 50 years ago, and it is clearly changing in a significant way now.”
Building a significant presence in the market is what both companies bring to the party. And planet broadcast’s emergence from the strangulation of hundreds of unique standards and years of proprietary strife to become just another industry using the same technologies represents something of a goldmine to Hallén and Cross.
“When IP took off we both jumped in, so our position is that we are already there. Where a lot of the market sees this as change, these are principles to which we have dedicated our entire strategy individually for 10 years at this point,” says Cross.
Hallén concedes that in some respects the market is catching up. He explains: “At the inception of Vizrt 20 years ago, we focused on developing our software as hardware agnostic, which was not the norm then. As a software company with software architecture you are basically IP by definition.
“What we have been doing all these years is to back port our IP infrastructure to SDI to comply with the appropriate protocols. Now the market is catching up with us we can let that go,” he adds. “When we compile the brilliant minds of both sides, we are creating something that can make significant change. That is what the aim is for this combination.”
Does it pay to have a sophisticated Opex mindset for customers of everything Vizrt can now supply in the area of software-based content production? Subscription for software tools has grown rapidly.
“It has, but as vendors supporting users across the world in different industries and at different types of sites we have had to cater for both models. We have at Tier One level a significant number of huge companies that are not interested at all in going to Opex,” concedes Hallén.
Cross adds: “In the technology world, ‘subscription’ is a buzzword of the moment, but I still see a significant number of customers who do not want to go to Opex yet. It depends very much on business models, and it has not all gone subscription by a long shot.”
Proprietary things will be gone. At NAB Vizrt stated that it is now the biggest player in IT/IP based video production. Is this based on combined market shares, or maybe the expanse of what it now offers in terms of toolsets over wider areas?
“You answered the question,” laughs Cross. “We are probably the one single vendor that has committed to a truly IT-based set of content creation tools, from kids in a classroom doing video production right the way up to national elections or the Super Bowl. It is both breadth of market, and the number of product offerings.”
One of the key attractions of NewTek was its awesome presence in the North American market. Vizrt already had 30 offices across the world, and 500 employees. Cross suggested at NAB that the combined company is one of the “most disruptive changes for the video industry in decades” and Richter scale in its potency. Was he for real?
“I should define ‘disruption.’ Ten years from now the video industry is clearly going to be different, and I believe it is going to happen in the same way as the mobile phone market changed over 15 years to its computer-based iPhone/Android infrastructure,” he says. “People will say ‘wow’ because the days of proprietary things will be gone, and we will be looking at a world dominated by computer networks and IT technologies.
“When people look back at the big things along the way, I think our deal will be one of them, because it is the first time a big player in this market has said, ‘we need to build the next generation content creation company,” Cross added. “This will be one of the key steps along the way that were signposts for where the industry is going. And that is why I see this as disruptive.”
ADDING IP CAPABILITY
The responses from the respective user bases were a key factor during the NAB Show.
“The user reaction surprised me,” admits Hallén. “Obviously we realized this was a good piece of news, but when I spoke to the Tier One user base they were extremely supportive. A lot of them had already piloted or worked a little bit with NewTek products. A great number of them saw it in the way Andrew (just) described about 10 years time, and they said that in that context it is a clever move.
“In terms of craft thinking both our booths were extraordinary, and the user base sees that we are adding much more IP capability,” he added. “They are enthused about what is going to come out of this combination.”
Cross was also surprised: “The reaction exceeded what I could have possibly hoped for. I thought it might require more explaining than it did.”
The dream of software-based video production has been bubbling up as the industry goal for some years, with lenses and camera bodies being almost the last hardware. Many vendors have had to spend millions of dollars re-inventing themselves through software and the cloud, so is it true that Vizrt’s biggest competition comes from newer software houses and recent start-ups, and companies entering the broadcast market from other industries?
“That is a valid point,” Hallén admitted. “As we move forward into an industry that is moving over to IP, very naturally the competition will come from elsewhere. It will not come from the traditional hardware-centric broadcast companies that are trying to re-invent themselves by adding more software, because I think that they are in for quite a struggle. Potential threats will come from elsewhere.”
The holistic aspects of the full workflow that Vizrt gives its customer base are key. “That gives us a head start, and it is up to us as a combination to be more innovative and to embrace new technology as it comes around,” says Hallén. “We have been successful doing that in recent times and I do think we will co-operate with new and completely different players.”
A GOOD MERGING OF WORKFLOWS
Cross agrees with Hallén, adding: “The broadcast market, which now includes lots of things, is a weird thing because there are workflows that matter. People do expect to work in a set way to produce a show, and the way that shows and the formats of shows exist is something that has evolved over 50 or 60 years from film.
“So whilst a lot of the technologies that have been created have been changed, a lot of the basic formats of shows have not,” he adds. “While the way you need to work in production has not changed, we want to give people better tools to make more people able to give that message. To some degree, what this industry needs is both a good merging of workflows that people need, but with the modern technologies that are now available. To the sense that this is true, it does give us a head start and strong position regardless of innovations that are happening elsewhere.”
Both Vizrt and NewTek had many technology partnerships prior to the acquisition, so will anything change?
“We will look for the same thing we always looked for, which is innovation,” says Hallén. “We partner with companies we think bring something really good to the table. The combination of Vizrt and NewTek becomes a bit of a platform for new technology. Bringing small innovative partners onto our platform in different ways of arrangement gives us a bit of an edge.
“And with the global customer base we now have together in small, big, medium and different markets, we have become quite attractive as a kind of springboard into the broadcast industry,” he adds.
Cross continues: “It has to be said that we are two strong companies. This was not an acquisition of weakness, but of strength. Our number one goal, both internally and externally, will not see us looking to change everything around because we think we are doing a lot really well.
“What does happen here is that the combined technology and innovation pool within the new and larger company is much deeper, and it allows us to move technologies between fields where it might not have made sense before,” he adds.
Hallén had just the experience to illustrates Cross’s point: “When we presented the acquisition internally, I was in Norway where we have a large R&D site and the reaction from one of the engineers was, ‘This is cool, can I actually take a piece of NewTek software I know about and bring it into my product? That would be awesome.’
“That reaction illustrates what we are up to together,” he adds. Will NAB and IBC remain strong and relevant through the big changes coming? “Users are clearly feeling different market forces impacting around them, and it is exciting for those shows. In many ways it is going to continue making going to those shows even more exciting,” says Cross. “It is not just the same things we saw 10 years ago; we are not seeing version 15 any more thankfully. The shows are changing, and hopefully we are a part of that. It is our intent to help bring that change to these shows.”