Commentary: A Serious Acquisition Creates More Magic for Adobe

‘Tis the season for acquisitions, or so it seems, as yet another niche software provider has been picked up by a giant software company. Early last week, Apple announced it was acquiring Silicon Color, which makes high-end color correction software that works with Final Cut Pro. Then it was Adobe’s turn to add something to its suite of production products: the company announced that it was acquiring Serious Magic, an outfit that started initially with a low-cost, high-quality greenscreen product but had branched into many different areas of production and had begun dabbling with webcasting and video blogging.

When Adobe acquired Macromedia last year, its stated intent was a marriage of Flash and Acrobat; that goal is being realized realized both with the introduction of the new Flash-based ebook reader that Adobe showcased at this week’s MAX user conference as well as with the increasing popularity of Flash Video. One Adobe spokesperson tied the increase in popularity of FlashVideo, which is Macromedia and Adobe’s name for the On2 VP6 codec, directly to the decision to acquire Serious Magic.

"The huge momentum behind Flash Video, which is powering everything from online TV shows to YouTube and MySpace, is turbo-charging Adobe's video business," said John Loiacono, senior vice president of creative solutions business unit at Adobe, in a press release. "The purchase of Serious Magic accelerates our vision to make not just video but all dynamic media an even more ubiquitous communications vehicle, whether you're delivering content for the broadcast market, over the web or on mobile devices."

Serious Magic’s initial product, its ULTRA chromakey and virtual set software, could play an important role should Adobe choose to get into the live streaming tools segment. Serious Magic long ago perfected the ULTRA’s ability to perform complex keying on a modest CPU. This keying capability, which used to require very high-end CPUs or dedicated digital signal processor (DSP) chips, was not the only trick in Serious Magic’s repertoire: the company also created a studio-in-the-box product, Visual Communicator, which scrolled teleprompter text and automatically launched pre-recorded video files, allowing a single person to create a believable news broadcast.

As the underlying technology advanced, it spun off several additional products, such as DV Rack, which provides direct-to-disk recording and a many of the vectors and scopes and and other production truck-type diagnostics in a single piece of software, and two additional presentation products. The first, Vlog It!, took Visual Communicator and geared it toward consumers interested in adding video to their blog sites. The second product, Ovation, was built forf the enterprise market. While it appears at first glance to be just another PowerPoint presentation enhancement tool, Ovation provides teleprompting and sophisticated anti-aliasing of standard PowerPoint text, bringing the presentation quality closer to broadcast quality.

So, is Adobe likely to move into the streaming tools segment? Signs, such as the advent of Flash Live, seem to indicate that it is maintaining Macromedia’s momentum towards live video content. Yet neither company had the kind of tools, such as live graphics and keying or background replacement, that Apple had showcased as part of its new iChat video instant messaging program at the recent Apple Worldwide Developers Conference. The Serious Magic acquisition, with technologies already geared toward one-take video recording, could easily be leveraged into the live webcasting space.

Acquisition of two other companies could also be beneficial to solidifying Adobe’s place as a leader in video codecs and live webcasting tools. The first acquisition would be On2. The company continues to innovate with its newer VP7 codec, which increases image quality at lower bit rates, making VP6 look like last year’s technology. True, Adobe and several other companies who use the VP6 codec have license extensions that allow them to integrate VP7 into their products, but the popularity of Flash Video makes On2 an easy target for acquisition by one of Adobe’s rivals, since it would give them licensing leverage to make things difficult for Adobe down the line.

The second acquisition Adobe should consider is NewTek, a company that’s rebounded in recent years with its award-winning TriCaster and TriCaster Pro products. The new Pro model not only provides hardware-based studio-in-a-box capabilities, including limited non-linear editing, but it also provides streaming output right out of the box. Having used a TriCaster Pro for several concerts, which were simultaneously recorded to hard disk and streamed to the internet, I can attest that the product provides a price-to-performance ratio second to none. Its main limitation is that, for streaming output, the only choice is Windows Media Video. With Flash Video, which handles graphics and text better than WMV, an Adobe-Serious Magic-NewTek combination could be quite compelling.