The Nemetschek Group has strengthened its market position in the Media & Entertainment software industry by acquiring US-based Red Giant. Technically, Nemetschek’s subsidiary, Maxon Computer GmbH, of Germany, has signed a definitive agreement to merge Maxon and Red Giant under the Media & Entertainment division of the Nemetschek Group, to create the global market leader in software solutions for digital content creation. After the merger, Nemetschek will hold the majority of the merged company.
Red Giant, based on Portland, Oregon, is a fast-growing company with profitability averages greater than the Nemetschek Group average. Its revenue picture for 2019 anticipates EUR 21 million.
Since 2020, Red Giant has built its brand through an award-winning, comprehensive product portfolio of software focused on motion graphics and visual effects (VFX). Maxon is best known for its award-winning 3D product Cinema 4D and the recently acquired Redshift rendering engine. As a result of this merger, Nemetschek Group says they will become the pure market leader in the M&E software industry and provide the most comprehensive and innovative product portfolio for its customers.
Both companies possess a superior reputation for the quality of their software with a who’s who of production companies including ABC, CBS, NBC, HBO, Netflix, Viacom, Universal, along with The Walt Disney Company, BMW, Facebook, Apple, Google, Nike, and others.
Maxon acquired Red Giant by combining a cash consideration of around EUR 70 million and granting shares in Maxon. After closing, Nemetschek will hold 85% of the shares and the former Red Giant owners around 15% of the shares of Maxon. Financing is provided by the company’s own cash resources and the taking out of a loan. The transaction is expected to close in January 2020.
Driving International Growth and Subscription Business
The merged companies will provide significant synergies and better access to customers by leveraging a worldwide sales and reseller team. Maxon’s subscription business will also grow significantly after taking on Red Giant’s subscription customers. While the focus in clearly in the M&E software industries, Maxon will continue to provide leading-edge technologies to the AEC brands of the Nemetschek Group.
“This merger is a major milestone, not only for Maxon and Red Giant but also for the design industry as a whole,” says David McGavran, CEO of Maxon. “Our combined technology and know-how have the potential to progressively reshape the content creation landscape for years to come.”
“Following the acquisition of Redshift Rendering by Maxon earlier this year, joining forces with Red Giant is the next important step to fully capture the great growth potential of Maxon in the media and entertainment industry,” explains Patrik Heider, Spokesman and CFOO of the Nemetschek Group. “With this move, we are consistently pursuing our strategy of expanding and strengthening this segment”.
Architosh Analysis and Commentary
For years we have wondered if the Nemetschek Group would add more M&E software companies to its group of subsidiaries, the notion being that Maxon by itself didn’t represent a significant enough beachhead in the market despite its popularity and technology. In past interviews recently the Group hinted that expansion in M&E could be on the horizon. Then Redshift Rending was acquired—a smart move by any measure—placing the world’s first biased GPU renderer firmly within the Nemetschek Group’s grasp. We expect to see, based on recent conversations with Nemetschek subsidiaries, strong synergies and outcomes behind Redshift’s technologies in the Group’s AEC customers in the near term.
Red Giant’s products are likely not well-known amongst many Architosh readers. The company makes numerous plugins, grouped together in five product suites, the popular host applications being tools like Adobe After Effects, Final Cut Pro, Adobe Premier, and other film and post-production tools. With a focus on motion graphics, particle effects, 3D effects and visual effects (VFX), Red Giant’s portfolio matches up with Maxon’s Cinema 4D nicely given its market presence in film and television for motion graphics in particular. Some of Red Giant’s technologies could spill over into the AEC space but we will need to take a deeper look at which ones and they would come about likely through Cinema 4D as the host application for visualizations. More narrative and film-like storytelling are increasingly being seen in high-end AEC visualizations so this acquisition bodes fairly well for the Group insofar as that trend continues.