Sony Pictures Acquires Sonic Foundry's Desktop Software Line
Posted Jul 1, 2003

Friday, May 2 brought unexpected news to video and audio studios around the U.S. and beyond, as Sony Pictures Digital announced plans to purchase all of Sonic Foundry's desktop software products and related assets for $18 million cash, along with trade payables, accrued liabilities, and capital leases associated with the desktop software business.

Sonic Foundry, a Madison, Wisconsin-based company best known for its Sound Forge professional audio production software, and widely acclaimed for its Vegas Video professional non-linear editing tool, has diversified its business in recent years to encompass Web streaming services with its Media Site Live product, and Sonic Foundry will continue to develop and market this side of its business. Sony Pictures Digital, which oversees the digital production and online assets of Sony Pictures Entertainment, is a longtime distributor of Sonic Foundry desktop tools through its Screenblast channel. In 2001, Screenblast began online sale of two applications, Movie Studio and Music Studio, which were developed with Sonic Foundry's desktop software development team. Screenblast debuted the Studio products in retail in October 2002.

The Sonic Foundry desktop line includes several applications for audio mixing, production, and recording, as well as video capture and editing, and most recently, DVD authoring and recording. These tools, all acquired in the Sony Pictures deal, include the flagship SoundForge; the professional CD mastering tool CD Architect 5.0; the widely bundled mixing tool ACID; Vegas Video professional non-linear editing software; and DVD Architect, a first-generation DVD authoring and recording application now available in tandem with Vegas as Vegas+DVD.

"During the last three years, we've developed a relationship with Sony Pictures," says Sonic Foundry CEO Rimas Buinevicius, "distributing our products under their own brand." He says the timing was right to make the deal, given "significant consolidation" across the board in the desktop software business, and his belief that, after twelve years, "we've taken the desktop line as far as we can take it." As for Sony's suitability as future steward of the Sonic Foundry products, he says, "Obviously, it's not a secret that Sony has electronics tied to the product environments our tools serve, all the way up to broadcast."

"We have great respect for the Sonic Foundry software and the award-winning team that developed and markets it," says Sony Pictures spokesman Don Levy. "As we expand our Screenblast service, the Sonic Foundry software line is a natural extension of it."

Both Buinevicius and Levy say Sony Pictures intends to migrate the development and product management teams behind the desktop software products to Sony Pictures following the acquisition, which they expect to complete in June 2003. Moreover, one interesting facet of the sale of this division of Sonic Foundry to Culver City, California-based Sony is that Sony Pictures intends to "maintain the Madison operation," Levy says.

One concern raised among the Sonic Foundry faithful and other content creation pros immediately after news of the sale broke, in online forums such as the video-oriented creativecow.net and the audio-oriented velvetrope.com, was that the products would lose their identity, further development of the tools would be abandoned, and that tech support would diminish as well. Levy says the continuity of the development team and the "Madison operation" will bring continuity to the products. "I expect the products will retain their names," he says; Sony Pictures will continue to develop the products with migrated Sonic Foundry staff, and, according to Levy, "tech support will continue as it is."

As for Sonic Foundry's future directions, Buinevicius says, "Our next chapter: What do you do with media after it's been created?" Buinevicius says the focus will shift to Web streaming and distribution services like Media Site Live, which he describes as a "$20,000 system that allows you to put content online. There's a different selling and marketing process" with a system like that, Buinevicius says. The transition to focusing exclusively on the services side of the business, he says, "is timed coincidentally with the recognition of the enterprise, and media management" as focal points industry-wide. "These are products we can build off and expand over time."