It would be fair to say that Native Instruments has been the subject of much online chatter of late. None of it has been especially flattering, and all of it has been assorted levels of doom and gloom. But this Thursday saw a somewhat alarming development in the ongoing roller coaster ride of NI’s fortunes, one that required some clarification from NI HQ.
The nutshell version is that word reached us of a serious number of layoffs (100) at NI HQ in Berlin, by our reckoning a full 20% of global NI workforce. Some digging revealed that this impacted on all offices and in all departments. The moment when my first email to my usual contact in Berlin was met with an out of office telling me that he no longer worked at Native instruments was a body blow. And after reaching out to the upper echelons of NI, it was confirmed. Bugger.
Now I could have pieced together some sort of gossip-based click bait headline grabber designed to bring in heaps of traffic at the expense of the truth while pouring salt into an open wound. But instead I asked after an official statement, and was sent the following. To be clear — I’ve had this since Thursday, but agreed to hold off on posting until a point was reached where the rumours started to become more widespread and perhaps in need of something more official. I think a Reddit thread fits that description. And it’s probably better if NI people hear about it directly rather than reading it online.
UPDATE: Numerous stories and forum posts are popping up now. But I’m told that there will be another update to the above statement offering more detail on One Native.
Anyway, here you go:
Native Instruments centralizes organization and reduces global headcount to focus on platform strategy
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.”
UPDATE: Some questions answered
If Native is building a new platform, why were resources cut?
Our new organization aims to break down functional and brand silos that have developed over time through the continuous expansion of our portfolio. Given our broad spectrum of products and the overlap between roles, it means that certain areas of product development are affected more than others by the redundancies. In the past, we have simply been doing too much at the same time and this strategic change as well as internal remapping of talent will allow us to move forward in a more effective and collaborative way.
With the focus on a platform strategy, do users need to be concerned about support for and investment in existing products?
We are fully committed to our existing brands Komplete, Maschine and Traktor. The reason why we are focusing on a platform strategy is actually to improve the experience for all users of our products. We strongly believe that by improving accessibility and usability of our portfolio, we will be able to provide an enhanced and more cohesive experience, both for existing and new customers. Rather than releasing more and more products, we want to ensure that users are getting the most out of our current products through a connected and unified experience.
Will Native Instruments continue to release integrated hardware?
Creating deeply integrated experiences between hardware and software remains at the core of our vision. However, we want to deliver more value to users of our hardware by implementing new features in the software that will allow for a better overall experience of our ecosystem.
What about the future of Traktor?
We continue to be fully committed to our DJ platform Traktor and its passionate users. Also within the DJ domain, we are focusing on improving the software experience, building on the creative and modular legacy of Traktor for both desktop and mobile. Supporting this, we are also continuing to evaluate the right accompanying hardware products. In fact, Traktor users can expect a new hardware controller this year.
Cutting to the chase
Native Instruments is moving to “One Native”, an online platform that aims to bring the brands together into a centralised hub. But in doing so, sadly there’s a 20% staff reduction across all departments in all countries, much of which is rationalising three disparate product teams (Maschine, Komplete, and Traktor) into one. Prior to this round of layoffs, NI had made around 30 engineers redundant as they did the first round of rationalisation.
At this point, it’s hard to tell if continuing difficult times has meant layoffs and prompted a new way of thinking, or if the new way of thinking came first and necessitates redundancies. It is however worth pointing out that according to industry sources, NI has been doing well sales wise at this point, which does indicate an appetite for NI’s current menu of music making stuff.
These are the facts, and that’s what I prefer to deal in. For obvious reasons, NI doesn’t care to comment more than the statement, and I’m not one to rub salt in the wound, for them or the vast number of people who have lost their jobs. But I feel it’s important for all of you to have a clearer and official picture of what’s happening.
I could turn this into an analysis piece, and pinpoint the time line of events and reasons for such a move, as well as working out exactly what form One Native will take. And I’m sure that in time I will dig into this in more detail. But for now, let’s hope that those who have been made redundant will find new jobs (many reading this will know those impacted), and that Native Instruments can pull through these difficult times and find a new way forward.