Nikon to acquire RED and make it a subsidiary

[jaygould]

First, they all have to figure out if it's pronounced N-eye-kon or N-eee-kon.

It's neither. It's pronounced N-ick-on.

 

[neuroanatomist]

It's neither. It's pronounced N-ick-on.

I wonder if that confusion is why they lost so much market share...

 

[Mistral75]

First, they all have to figure out if it's pronounced N-eye-kon or N-eee-kon.

And, on the other hand, whether it's pronounced RED or LED.

 

[landon]

 

[Del Paso]

Yellow and Red, are they Orange now?

No, this is a presidential color!

 

[ethanz]

I'm wondering where Nikon got the money for this. I thought they were kind of on dire straights.

 

[danfaz]

It's neither. It's pronounced N-ick-on.

Depends on where you live.

The Official Way to Pronounce 'Nikon'

You may have heard the camera brand "Nikon" be pronounced in different ways by different people in different countries. But what's the official and

petapixel.com

 

[David - Sydney]

I'm wondering where Nikon got the money for this. I thought they were kind of on dire straights.

Yeah, I'm wondering that as well. I didn't think that they had a pile of cash needing an acquisition to get a high margin business. Maybe they see it as a better profit driver than the lower margin (my guess) FF bodies. Perhaps it is the raw compression patent issue adding to the business case.

 

[Del Paso]

Yeah, I'm wondering that as well. I didn't think that they had a pile of cash needing an acquisition to get a high margin business. Maybe they see it as a better profit driver than the lower margin (my guess) FF bodies. Perhaps it is the raw compression patent issue adding to the business case.

Nikon produces far more than cameras, excellent microscopes, chip production equipment, binoculars etc... Just take a look at the Wikipedia "Nippon Kogaku" article.
And, if they want to survive, expansion isn't necessarily the worst way.
I rather wonder why Canon didn't seem interested, as they have recently stressed the growing importance of video.

 

[amorse]

Maybe your assumtions were incorrect.

My assumptions have been incorrect before, they could be here, and they will be again. I'm open to the truth, whatever it may be, but in this instance I'm simply wondering what (if any) impact there could be to Canon in this acquisition. I'm not saying anything is going to happen, I'm thinking out loud (and poorly at times, to be fair).

My reasoning on why this is relevant to Canon was because RED has been notorious for filing lawsuits against camera manufacturers/companies they think have wronged them - like when the sued ARRI for corporate espionage, or when the sued Sony for infringing on their RAW video compression patent (and were later counter sued by Sony), or when they sued Apple for infringing on their RAW video compression patent (and won), or when they sued Nikon for infringing on their RAW video compression patent (and the case was dismissed, though through a joint dismissal where they both agreed to it, and less than a year ago). From the little I've read here and there, it seems as though RED's patent for in-camera compressed video is pretty wide ranging and they've been accused of filing lawsuits all over the place against anyone compressing raw video in a lossless format. I believe that Apple even argued that the original patent shouldn't have been given to RED because it was too broad (though this was dismissed).

Canon seems to be a notable standout in not getting sued by RED, and RED happens to use the Canon mount for their cameras. I'm not sure that it's far fetched to wonder if RED chose not to file lawsuit against Canon, despite Canon using raw video compression like others RED has sued, because they had an agreement which was mutually beneficial. Or for all we know, maybe RED licensed it to Canon, or maybe Canon's compresison is just too different to warrant a lawsuit - who knows. Regardless, even if Canon's compression did infringe on RED, suing Canon would have been bad for business when RED is using Canon's mount. The bottom line that I come back to is that if Nikon owns that patent now, surely that means they're not at risk of being sued again by RED, but will they pick up where RED left off and sue other companies they see as infringing on that patent? And if there's no longer any dependence on playing nice with Canon, does that make Canon a target for lawsuits?

I'm no expert, but based on the above it certainly seems like a really intersting move by Nikon and I'm definitely curious to see if it has any borader reaching impacts beyond today's news.

 

[3kramd5]

Canon seems to be a notable standout in not getting sued by RED, and RED happens to use the Canon mount for their cameras. I'm not sure that it's far fetched to wonder if RED chose not to file lawsuit against Canon, despite Canon using raw video compression like others RED has sued, because they had an agreement which was mutually beneficial. Or for all we know, maybe RED licensed it to Canon, or maybe Canon's compresison is just too different to warrant a lawsuit - who knows. Regardless, even if Canon's compression did infringe on RED, suing Canon would have been bad for business when RED is using Canon's mount. The bottom line that I come back to is that if Nikon owns that patent now, surely that means they're not at risk of being sued again by RED, but will they pick up where RED left off and sue other companies they see as infringing on that patent? And if there's no longer any dependence on playing nice with Canon, does that make Canon a target for lawsuits?

I can not imagine that any IP sharing or licensing was not done under protection of contract. Nikon buying Red doesn't null any legal agreements entered into by Red.

 

[amorse]

I can not imagine that any IP sharing or licensing was not done under protection of contract. Nikon buying Red doesn't null any legal agreements entered into by Red.

Sure, and I'd agree with that, but in the event that Canon had licensed a codec, I wouldn't assume that RED issued a perpetual and permanent license to use video compression in all future products. The question is whether or not Nikon would be willing to renew that agreement, or extend it to new products.

 

[David - Sydney]

Sure, and I'd agree with that, but in the event that Canon had licensed a codec, I wouldn't assume that RED issued a perpetual and permanent license to use video compression in all future products. The question is whether or not Nikon would be willing to renew that agreement, or extend it to new products.

Canon has had Raw lite for some time now so I assume that it is their own IP... although I don't have intimate knowledge of the Red raw compression patent.

 

[David - Sydney]

Nikon produces far more than cameras, excellent microscopes, chip production equipment, binoculars etc... Just take a look at the Wikipedia "Nippon Kogaku" article.
And, if they want to survive, expansion isn't necessarily the worst way.
I rather wonder why Canon didn't seem interested, as they have recently stressed the growing importance of video.

The way that the acquisition was announced is an "equity transfer" and as an acquisition. Not paying in cash and yet not a merger. I'm sure that someone better versed in M&A could elaborate further on this method.

Jim Jannard was the founder and with Jarred Land owned Red. Jim retired in 2017 and so maybe it was just time to find a buyer. I'm sure that they have been significantly rewarded.

As for Canon, I guess that they couldn't build a decent business case or due diligence failed.

 

[neuroanatomist]

I can not imagine that any IP sharing or licensing was not done under protection of contract. Nikon buying Red doesn't null any legal agreements entered into by Red.

Many agreements have a ‘change of control’ provision that allows one party to nullify the agreement if there’s a change of control for the other party.

Sometimes extreme measures are taken to avoid triggering that clause. For example, when Merck bought Schering-Plough, they structured it as a reverse merger (meaning technically Schering-Plough bought Merck for negative money, then immediately changed its name to Merck), specifically to avoid triggering the change in control clause of a large, lucrative agreement SP had with another pharma. In that case, the other pharma sued, and ann arbitrator saw through Merck’s ploy.

 

[amorse]

Canon has had Raw lite for some time now so I assume that it is their own IP... although I don't have intimate knowledge of the Red raw compression patent.

I certainly don't have intimate knowledge either, but googling around would suggest Canon's Raw cinema Light was released with the C200 which came out in 2017 (I think). RED has been litigating over their raw video patent since at least 2013, and it looks like they were filing patents on this in 2008. Maybe Raw cinema light isn't actually lossless (so it wouldn't infringe on the patent), or maybe they licensed it, or maybe they had an agreement to cooperate. I doubt we'll ever know. It'll be interesting to see what Nikon does with that though - could be that agreeing to buy RED was how they got out of the lawsuit and that was all they were after. Could be Nikon wanted to have another option on where they get their sensors, or maybe they see licensing it out as a potential revenue stream. Maybe all of the above?

 

[3kramd5]

Many agreements have a ‘change of control’ provision that allows one party to nullify the agreement if there’s a change of control for the other party.

sure, but that wouldn’t work against canon in the way some are worrying.

 

[Nathan Phillips]

Keep seeing people say that canon won’t be able to shoot RAW (compressed or not) internally anymore due to patent… yet Nikon won their case against RED. I would think this makes it all pretty much a non issue for compressed RAW internally.

I see more companies doing compressed RAW internally now if anything.

 

[Dragon]

Yeah, I'm wondering that as well. I didn't think that they had a pile of cash needing an acquisition to get a high margin business. Maybe they see it as a better profit driver than the lower margin (my guess) FF bodies. Perhaps it is the raw compression patent issue adding to the business case.

As one who was in the video production equipment business for 40 years, I can tell you that the market that Red caters to is a high margin market (from a raw COS perspective), BUT it is also a market that requires a high level of customer service and for lack of a better term, a lot of customer po po patting. Organizationally, Canon has considerable experience in that market and Nikon has virtually none, so I see the risk factor in the Nikon acquisition as quite high.

 

[LookingThroughMyLens81]

The news has been divisive within the RED owner/operator community. Some are saying it's the end of everything RED, others are saying it's a "brand new day" for digital cinema cameras, and others are ambivalent about what the future holds for the company and it's customers. From the tone of things on social media, Jim and Jarred are walking away completely and RED could/would continue to operate on autopilot - as a camera selling company - for a few more years, at least, so the owners and operators of recent cameras can continue to get support and service. By 2028, when RED's highly litigated RAW patents expire, Nikon could easily have their own digital cinema camera built on RED's imaging and workflow tech and cinema lenses ready for the market, with the intention to use those to replace the RED brand with their own. Knowing the two J's, they likely have an upgrade clause in place that allows RED camera owners to get trade-ins and discounts for Nikon's first generation of cinema camera.