Adobe Wants to Come in from the Cold

Though Adobe’s Flash player sits in nearly every browser and plays hundreds of millions of videos (and other things) per day, the company doesn’t charge for much of this incredible amount of usage. Now, leading up to the launch of its next platform, Apollo, Adobe is trying to wedge itself into a more lucrative position.
At its developers’ conference in Las Vegas last week, Adobe announced it would spend $100 million in venture funding on startups that use Adobe platforms, especially Apollo, the company’s new system for running applications written in Flash, HTML, and JavaScript from the desktop. The core idea is to marry the online and offline worlds, but the system is only out in preview now, so there aren’t exactly startups queued up for the cash.
Adobe is working hard to put itself in the middle of something. It must have thought it was already there with Flash, the ubiquitous (really ubiquitous) player it acquired along with Macromedia last year. Since then, Flash has come become a part of the biggest recent trend on the web, online video. Every new video-sharing site on the web, from YouTube on down, uses Flash, but Adobe doesn’t get to charge many of them for the service. Rather than streaming, which would require Flash servers, most of these sites opt for downloading and caching videos locally. Content owners like ABC pay to use Flash, but that’s not where all the viewers go.
Beyond video watching, on the video editing side, Adobe must also be feeling a bit left out. Most every videoblogger and amateur filmmaker we’ve heard of uses Apple products these days, with only the rare Windows videogeek using Adobe Premiere. So Adobe recently tried to buy its way into that market with last week’s purchase of Serious Magic, maker of DV Rack, ULTRA 2, Ovation, Visual Communicator and Vlog It.
We don’t mean to portray Adobe as desperate; its stock is trending upwards and its balance sheet is consistent. How is Adobe going to make money off these new efforts? While the Serious Magic products will be for sale, Apollo will be be free. The company says it will sell development tools and server software to monetize Apollo, as it does for Flash. If Adobe funding startups results in system that’s ubiquitous and makes money for the company, then $100 million will seem like money well spent.