As part of the Sneak Peek of Final Cut Pro X at the NAB 2011 Supermeet, Apple updated their user stats to 2 million customs (with 94% satisfaction).
Now, my understanding is (with help from Oliver Peters) that this number includes Final Cut Express and the early individual sales of DVD Studio Pro and Motion. Some customers will be included having paid only $199, while others will have paid the $995 purchase price and one or more upgrades. For a customer who purchased FCP 1 for $995 and paid for every upgrade, then that customer has invested, over the 12 years since NAB 1999, around $3750.
But balance that with those who bought educational pricing, and other discounted opportunities plus those low priced buy-ins and I’ll assign an average income per user of $1000. Â I think that’s conservative but the data to make a more accurate assessment isn’t available to me. (If you have it philip @ intelligentassistance.com without the spaces.) Besides, it makes the numbers easy to work with.
So, 2 million customers with an average revenue per customer of $1000 (over 12 years) and that gives a gross revenue of $2 billion dollars or roughly $168 million in revenue per year.
I don’t have any clue about the cost side of that equation, but if there were 100 people employed on an average salary of $100,000 a year (many will be below that, few above) then we have payroll of $10 million a year. I could be totally wrong about how many people are involved so let’s say costs, with office space and support are $50 million. Or $75 million with advertising and promotional events. Even if the cost side is $80 million a year (and I’d be happy to learn where I might be wrong on the cost side) then it’s still an $80 million a year profit.
That’s chump change to Apple but it’s a brilliant business as a stand alone. Much more profitable over the last decade than Avid, for example. But in the light of the Mac Division generating (as we were told at the Back to the Mac event) $22 billion a year, you can understand why some people worry that Apple isn’t serious about the Pro Apps.
But that’s about to change. Dramatically.
iLife and Final Cut Pro trainerÂ B.T. Corwin (who’s also the wife of noted FCP Trainer and authorÂ Tom Wolsky) pointed out to me on Wednesday at NAB, that Apple have some 50 million iMovie customers that they don’t make any money from. From there I did the math. But before we do that, let’s note that Final Cut Pro X will be a much more comfortable upgrade for an iMovie user than Final Cut Pro 7 was. Although the iMovie ’11 and Final Cut Pro X interfaces are somewhat similar there’s still a lot to learn, but it’ll be a smoother transition than going to the current version.
Almost all those 2 million Final Cut Pro customers will immediately buy Final Cut Pro X, even if they also plan to crossgrade to Media Composer. That’s a neat $600 million or nearly four times my estimate of current revenue. Â But add in another 3 million iMovie upgraders and that jumps to $1.5 billion in the first year, heading for 10x the existing revenue for Pro Apps!
I certainly think they could get that 5 million figure in the first year. In Episode 25 of The Terence and Philip Show Terry Curren thinks the number will go to 10 million this next year and B.T. joins me with the 5 million prediction.
Whichever way it comes down, the relevance of Apple’s Pro Apps’ revenue to Apple will jump from “nice but really insignificant” to “now this is a business unit we care about”. A business they care about enough that Phil Schiller -Â senior vice president of worldwide product marketing at Apple – was there in the audience.
And they always did, because back in 1999, at the release of iMovie version 1 and the DV iMac Steve Jobs himself said:
We think Desktop video is going to be the next big thing. Imagine this in classrooms. Imagine classroom video reports, imagine this with parents, imagine the Steven Spielburgs of the world being able to use this technology when they were kids. Itâ€™s going to be unbelievable.
If, and it’s a huge if, Final Cut Pro X turns out to not suit some movie and episodic television workflows as well as the current one, and those folk migrate to Media Composer or Premiere Pro, that would be unfortunate but the number of customers they’ll lose is likely to be zero (because everyone will buy Final Cut Pro X anyway). Even if they lost 50,000 or even 100,000 customers, that’s just (at a maximum) 5% of the current user base, and 0.02% of the new customer base.
This version is about a foundation for the next decade of innovation. And the next decade of highly democratized video production.