Autodesk Buys Distributor

Digital design firm Autodesk Inc. Thursday took more steps to bolster its software offerings when it agreed to
acquire the software product line from Media 100, a Marlboro, Mass.-based digital media specialist responsible
for facilitating the delivery of the popular short films made by

Autodesk promised to pay Media 100 $16 million in cash for the deal, due to close in Autodesk’s third quarter. For Autodesk, perhaps
best known for its AutoCAD architecture and construction design software, the acquisition signals the San Rafael, Calif. firm’s
entrance into streaming media to give its customers a different delivery method.

Autodesk no doubt looked at Media 100’s success in marketing with its streaming products; the films, directed by such
famous directors as pop singer Madonna’s husband Guy Ritchie, are luring new car buyers through a unique blend of advertising and

Specifically, Autodesk will add Media 100’s Cleaner product family — Cleaner 5, Cleaner EZ, Cleaner Live, Charger and
SuperCharger — and the editing and dynamic streaming media production software of CineStream, EventStream technology, EditDV and
IntroDV to its so-called “Discreet Division.” Cleaner delivers streaming audio and video to sites; CineStream, its predecessor
EditDV, and IntroDV will provide Discreet with streaming media production and non-linear DV editing. With these new additions,
Autodesk it is banking on the idea that customers will create, distribute, re-purpose and publish media content for the Web.

Paul Lypaczewski, general manager of Autodesk’s Discreet division, discussed his outfit’s motives in a public statement.

“The advantages of streaming are particularly compelling in today’s economic environment, as companies can improve productivity and
customer communication with engaging, informational webcasts,” Lypaczewski said. “The benefits of the full Discreet-Media 100
software product line will effectively align us to capitalize on this industry growth trend.”

So, we know why Autodesk made the play that it did. But why did Media 100 cast aside what was a very respectable streaming software collection? Media 100 President and Chief Executive Officer John Molinari discussed his firm’s motives in a conference call Thursday afternoon. While calls such as these often result in an exec bemoaning the fragile industry, Molinari carried a different tune. He told listeners that with the slowdown of spending on streaming media in the last several months, it became clear that Media 100 would have to look in another direction — the future. And Media 100’s skipper is very optimistic.

“While we had seen substantial growth in previous quarters, many of our tech customers face their own challenges and they have reduced their spending,” Molinari said. “This persisted for the last three quarters, leaving us to think about the future.”

Molinari said Media 100 could either wait for video streaming business to pick up, which he said may take another two to three years, or they could focus on next-generation opportunities. And the latter is exactly what Media 100 proposes to do. Molinari said that by the first half of 2002, his company hopes to roll out a cutting edge, full digital media delivery system, code-named Pegasus, which the firm’s engineers have been developing since 1998.

“This will allow artists and designers to experience blindingly fast visual effects,” Molinari claimed. “It is both revolutionary and evolutionary and was fully designed to support emerging broadband capability, which transform the quality of current film and video over the Internet.”

One of the standout specifications Molinari listed for this “media supercomputer” was a 240 megabit-per-second broadband delivery speed for films, videos, etc. This would present an attractive value proposition for content providers. When he was asked what to compare it to, Molinari said it will deliver audio and video content at such a high quality and speed found “nowhere else on earth that I know of.”

Media 100 will also continue to develop digital media systems, such as iFinish and Media 100i, as well as continuing support for its ICE family of effects acceleration solutions, and its MediaPress family of real-time MPEG-2
encoding solutions. Personnel from the software division of Media 100, currently based in its Los Gatos, Calif. office, will move to
the Autodesk Discreet division.

As for Autodesk, the new maneuvering to provide customers quality Webcasts could very well be a challenge in light of the spiraling economy and the aforementioned slow rise to prominence of streaming media that goes along with it. But Autodesk may be one to accept the task after having success with, under whose aegis the construction software for architects is sold. Over 125,000 construction professionals use its online services to work on roughly 35,000 projects.

Autodesk managed to spin off off two years ago
in a highly favorable economic climate, but just this week completed a bid to buy it back for $15 million in cash, tucking it in to protect it from the ailing economy. Autodesk had
retained a 40 percent stake in the spinoff, and succeeded in purchasing the remaining 60 percent this past Tuesday.

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