Getting Rich on Rich Media? Sonic Foundry Refocuses and Releases

With a name like Sonic Foundry, one might expect to find a company founded on things sonic. In fact, the company that has been known as a digital audio and video software developer now bills itself as a provider of professional digital media solutions, focused on enterprise rich media applications. In recent months, Sonic Foundry has made a series of announcements with serious implications for the future of the company. Despite tightened budgets across the board, Sonic Foundry has managed to find buyers for two of its divisions, which—along with the release of a new version of its MediaSite Live Web communications solution—signal the company's plans to narrow its overall focus.

On May 2, 2003, Sonic Foundry announced the sale of its desktop software products and all related assets to Sony Pictures Digital for $18 million in cash and certain trade payables, liabilities, and leases. Just over two weeks later, Sonic Foundry formally announced that Deluxe Media Services, Inc. had purchased its entertainment industry-based business (including digital media conversion, encoding, and distribution products and services) for roughly $5.6 million in cash. Sonic Foundry used the combined $24 million in revenue to repay outstanding debt and fund future ventures.

According to James Dias, VP of enterprise solutions for Sonic Foundry, although the company had, "a very deep expertise in desktop software," they found that the field had become, "a hyper-competitive arena with lots of players selling to a price-sensitive market." Sonic Foundry decided to leave behind the desktop software market and move to digital media solutions, which they believe to be "the core solutions area," says Dias. With fewer players and a potentially large and lucrative market, he explains that, "this is the product area that we rolled up our sleeves for."

In an effort to satisfy this burgeoning consumer base, Sonic Foundry has devoted most of its efforts to developing, improving, and promoting MediaSite Live. When they first began dabbling in Web communication tools, Sonic Foundry expected that companies would build large repositories—a hope that has not come to pass. The reality is that most clients need only a two to three month shelf life for rich media content. While Sonic Foundry is not attempting to replace the high-end production process, they are targeting those consumers who need to produce Web content intended for shorter periods of usage.

They have also found that, although MediaSite Live is equally capable of producing live or on-demand content, the on-demand features are used significantly more often than live. With exceptions such as CEO briefings and other timely events, Dias estimates that the ratio of on-demand to live use is an, "almost 70/30 proposition if not higher than that."

Sonic Foundry will begin shipping the latest version of MediaSite Live (v3.0) in July and has significantly upgraded the product from its previous version. According to Dias, there are three major enhancements in v3.0 that are designed to help get information, "to the broadest possible audience in the most convenient way."

First, v3.0 has integrated database capabilities for content lifecycle management. As part of the company's refocus, Sonic Foundry has shifted its concentration to tools for building and managing content instead of searching and taxonomy and v3.0's database-driven features are a reflection of that shift. The latest version also offers Macintosh support for the viewer. Sonic Foundry has a strong following in the educational environment and a lack of support for Macintosh had become, according to Dias, "the number one problem that was popping up." In addition, v3.0 offers a "pack and go" feature that enables users to burn streamed and interactive features on to a CD, which can serve as a fully operative and independent presentation. The latest version also features enhanced presentation management, a multiple viewer template, an enhanced security model, improved capture and encoding support, and enhanced interactivity such as polling and Q&A.

Sonic Foundry and Dias maintain that simplifying the process by which people transmit information is the key to succeeding in the digital media solutions market. To that end, the company is making a concerted effort to marry hardware and software. Rich media "has been a rather time-consuming, convoluted, and expensive process," says Dias. By narrowing their focus and improving their core solutions products, Sonic Foundry believes that will not be the case for long.