Native Instruments issues official statement regarding the state of its business

Responding to many rumors swirling around the ether, Native Instruments has issued an official statement regarding their business. Here is that statement:

Berlin, August 29, 2019 – Native Instruments, the world's leading provider of software and hardware for computer-based music production, announced today a plan to centralize their global business operations, which includes a headcount reduction of 20% across all locations.

The key reason for this difficult decision is to create the right organizational setup to focus on the development of a new, unified and fully integrated platform on which the company's entire portfolio of products and services will be available next year. This change comes despite growing revenues in 2018 and the first half of 2019, but as a response to an increasing cost structure due to the company's previous divisional setup and multi-brand approach.

"Today is a very emotional day for the Native community. We've been driving innovation in music creation since the 1990s. First through software instruments, then by expanding to an integrated ecosystem with complementing hardware and now by creating a unified platform experience for the modern music producer," said Daniel Haver, the company's CEO and co-founder.

"To make this transformation successful, we needed to adapt our strategy, including a centralized functional setup that can support our vision of 'One Native'. Unfortunately, this also means we had to make some tough decisions and part ways with a number of employees. This has been the hardest part of this transformation," he added.

Global headcount reduction of 20%.

As a consequence of the company's newly centralized organization to focus on its future strategy, Native Instruments had to make the difficult decision to reduce its workforce by around 100 employees across all sites. With most of the affected employees located at the company's headquarters in Berlin, the departments that were impacted by the consolidation include Sales & Distribution, Marketing & Product Management, Administration and Engineering.

All employees were informed about these changes on Thursday, August 29, 2019. The company regrets the impact this has on their employees, their families and the community.

In addition to severance packages and outplacement services, Native Instruments has also established contacts with other Berlin-based companies that are currently looking for highly qualified personnel.

"This was the most difficult decision we had to make in our entire history, as our past successes have been enabled by the work of some of the best and most passionate people in the music industry. We thank all employees for their commitment, hard work, and their high degree of loyalty to Native Instruments. We are fully committed to doing all we can to take care of our employees impacted during this difficult time," said Daniel Haver.

New platform starting in 2020.

Recognizing changing customer behaviors worldwide, the aim of focusing on a unified platform strategy is to create an expandable commercial and technological basis for future growth in the digital music production area. For that, a new platform is currently being developed with the goal of offering new ways of accessing the company's core products and services, as well as complementary ones from third-parties. The centralized platform will also include the company's expanded portfolio of loops and samples, which is currently part of sounds.com, and will launch in 2020.

The company's previous divisional structure, functional and brand silos, did not allow for a successful implementation of this strategy up until this point.

"Customers today are expecting a seamlessly integrated experience when consuming and accessing creative goods and services. We are confident that we can offer music producers worldwide a unique and premium experience by connecting our existing ecosystem of award-winning software and hardware to a centralized online service," said Mate Galic, Native Instruments' Chief Innovation Officer and President.

"In the past, we expanded in different product lines, which was also reflected in our organizational structure. Our platform vision, however, requires a much more collaborative approach, having all parts of the company work together towards one common goal."

 

I hope this new platform, understands the need for us to layer synths like that in the workstations we left for Komplete MK2,and that many of their customers prefer our own daws and not to make a new daw,and to keep it simple and stable. I for one welcome this change, I think they can finally focus on one common goal here, great workflow for music production.

 

I am not sure. This doesnt look good in my eyes. NI was on such a point when they understood that they dont come further according their oppinion with kore 2. Now it seems the same, but additionally with pressure from investors. So what you have to do is to come up with new business models to create reveneu and be efficient in cost management. My only hope is that they do not start again a complete new format for .nks.

But what comes for sure is another selling modell. Rent to own, or just rent for monthly and yearly subscription. Hopefully they let the new appliaction not only run in the cloud. But it would of course allow them more to control their ecosystem especially piracy.

The pressure on the industriy seems high now. But i'm not yet sure about these new business models. I guess a lot of people are not willing to pay for something they canot own at the end. Thats why Steve Jobs as well was a huge supporter of to poses music with i-tunes at the beginning.

A plguin has not the same artistic relevance like a piece of music, which you by the way could participate on value appreciation in the future when you pocess a vinyl or a cd. But at the end, i dont see people arent willing to pay for something they can never pocess.

Let's say to rent something and when you pay it off and a new version is released and you dont want that you should could keep your last fully paid version, because you rented it the whole period lets say as en example. But i dont see that happen with NI.

Lets see whats coming...

 

If I then have to pay for every little upgrade for products I already own - then i will go and slightly change to something else - but we will see what exactly all that means, but i fear nothing good for people who don't want to pay monthly.

Uwe

 

I might be too optimistic, but in my opinion the integration might concern Traktor and Maschine-Komplete branches. It would make sense. Seamless integration of both worlds. It is quite absurd it is not possible (seamlessly) to use Maschine to control Traktor. I know it is possible to use third party scripts, but no official from NI.

I hope, NI will not throw away Komplete.

 

Trust is most important.Trust in quality that's most important thing and I hope for the best

 

Regarding the software instruments and plugins, not much has changed since many years. When new version of Komplete comes out, the update includes some new Kontakt instruments here, a few new Reaktor synths there and sometimes a new effect plugin. Reaktor is the only flagship-product with a major update in the recent year while Kontakt and Guitar Rig are still the same. It isn't worth to buy every new Komplete update just to get new Reaktor synths and Kontakt instruments while the features of the applications are (almost) the same. Enhanced versions of Kontakt, Guitar Rig, Absynth, FM-8 and Battery would be a better reason.

Regarding the hardware controllers (Komplete Kontrol, Maschine and the Traktor stuff), the hardware products theirselves are not bad. But the disappointing on it is that they're made just to be used with an unique software offered by Native Instruments. There are no official datasheets and technical documentations or software development kits to make it easy to others to develop alternatives (including community-driven ones) that work with the hardware. Beside that, even the other Native Instruments software does not support the devices natively without needing to use the Komplete Kontrol or the Maschine software. I don't own Maschine or Traktor equipment but a Komplete Kontrol keyboard. And I am very disappointed of the Komplete Kontrol Software.

 

Regarding the inner rumors about organization and management decisions i hope that NI will find the strategy and vison everybody (internal) is asking for. Restructuring can be healthy (cut away what is not necessary) - this always leads to more work for fewer people during the organizational restructure phase but in the end to should be better than before. But restructuring can also be pathogenic (cut away what is needed) - this sometimes leads in an unbalaced structure and the whole organization can become instable.
I think there are two souls fighting in the NI CxOs minds - one is the "small agile music company" and the other is the "big player in music industry". Small companys can build great stuff, they are small, fast and agile and can react fast to market changes. But they lack strategic foresight, vision, financial resources and organizational strength which is needed to grow in a healthy, stable way and to get a bigger profit margin. Big players were slow, don't try new things and mostly bring "pseudo" innovations which is almost make a good product better but they are stable and find the fine line between innovation and traditional products and their customer care.
NI has grown as company over in the last 20 years, the product portfolio has been incredibly expanded, the dependencies on suppliers and investors have grown larger. The target market is the "regulary guy who make music at home". The last big vision was to "set industry standards" - which results in the "NKS" platform and "Stems". While "NKS" seems to work ok (some plugin companies use it, but many not) - "Stems"has fallen far short of expectations.
But what is about organization, strategic goals and what is the vision for 2020?

It is not a big secret that the introduction of a subscription service alone or in combination with the cloud to something like "Native Cloud Access" is not the solution for gain the profit margin or to solve all current problems and do not work as a vision for 2020 and beyond. And it seems that the cloud strategy which contains "sounds.com" and "looploft" don't really work well enough.

A lot is happening on the music market right now: affordable polyphonic analog and hybrid synthesizers, AI that makes music and masters, machine learning audio tools, audio streaming through real analog gear via cloud and alot more.
The global music production software market is expected to grow to USD 6.26 billion by the end of the period 2018-2022, according to the latest market research report. The greatest growth is expected in the "mixing" segment - which NI is a part of with the TRAKTOR production segment. So while "stem" was the right basic idea at the time, it seems that there is something important is missing to fulfill the needs of a growing demand for mixing. Maybe if NI can find a way to create a sharing platform for mixing stems, where fresh and popular, well known artists can sell their music in stems so that everyone can buy it and remix it? Like splice but with more artists, better integration into the products and monetarily attractive to engage users to create new remixes?

If we think "visionary" we want a distruptive, new way of making music - easy and fast, with alot of joy and fun in the process. And I think NI is still searching for this "mystic formular".

 

So, 10 months later could you please tell us more about the new platform ?

 

Yeah right.. wishful thinking

I think they will announce in September/October timeframe if anything

 

Ok,

 

They should look to Ampify (Novation based) to get some ideas.

 

There is no new platform coming. One Native is not a consumer product or platform; it’s an internal organizational/development strategy.

 

Perhaps they should not have then used the term 'platform':

"The key reason for this difficult decision is to create the right organizational setup to focus on the development of a new, unified and fully integrated platform on which the company's entire portfolio of products and services will be available next year."

 

I agree. The communication was not very clear, and filled with lots of vague statements.

 

It’s the end of an era. After more than 20 years leading the company, both CEO Daniel Haver and CIO/President Mate Galic are out of their roles - and NI presents a new KOMPLETE Package which is ...uhm...a bit disappointing.

The big "plus" is that Guitar Rig gets an update - since 2011. The other parts of the package aren't brand new or spectacular.

Popular Software like FM8 or Absynth 5 need an update too - while the main core sound is still popular, the GUI is usable but not breathtaking and while the Absynth GUI was maybe funny in the first days, its very odd in these days.

Will I buy the KOMPLETE 13 Package? I think not, there are too much "player" and I miss synthesizers like "RAZOR" or SCANNER XT in the "normal" package - and KOMPLETE 13 ULTIMATE is still very pricey.

 

Sounds like Loopcloud or Spitfire Labs to me within an NI interface. Maybe now we'll be able to increase the size of the KK wrapper in DAW..

 

Stick a fork in it... NI's goose is cooked. If they can't even get MIDI learn in Massive X right, I have very, very little hope left for this company. I've spent thousands on them and am frankly disgusted at their behavior towards their loyal customers over the years. They've discontinued so many cool and innovative products without any explanation. It's very clear that this company was being run by clueless execs rather than actual electronic musicians or those familiar enough with the industry.

I will most likely never throw another dollar at this waste of a company.

 

I’m wondering what alternatives you will go to?

 

I have so much software now that I very rarely even look to anything NI anymore. Kontakt occasionally, but only for libraries, and even then I don't use it that often. They just suck. They truly deserve to go out of business for the crap they've pulled over the years now. Their support is abysmal. They do not care. Corporate execs speak an indecipherable language of bullsh!t and think they're good at everything.

Not putting up with it anymore.