MetaCreations to Sell Off Graphics Software

MetaCreations, which announced in December that it was divesting certain graphics products to focus on its MetaStream 3-D streaming format, quietly revealed Wednesday that it is in negotiations to sell all of its prepackaged graphics software, including Painter, Bryce, Poser, Canoma, Carrara, and the KPT Photoshop filters. The news was buried in a press release announcing the company's fourth-quarter financial results. Those results, not surprisingly, showed a substantial net loss of nearly $40 million for the quarter, which the company attributed largely to its recent restructuring.

Previously, MetaCreations had said that it would "significantly restructure its business to focus on its e-commerce visualization solutions and to divest its graphics software assets that do not complement this strategy." At the time, the company did not say which products would be divested or who the potential buyers might be. The e-commerce strategy is based on MetaStream, a technology that allows streaming of 3-D graphics over the Web.

The company says it is currently in negotiations with "several potential buyers and expects to announce a transaction before the end of this quarter."

"We are moving swiftly to divest the company of all prepackaged software products, and I'm pleased that the restructuring effort has been executed on plan," said MetaCreations CEO Mark Zimmer in the press release. Zimmer, ironically, is considered to be the father of Painter, one of the programs the company plans to divest.

MetaCreations offers its streaming technology through MetaStream.com, a joint venture with Computer Associates in which it holds an 80 percent stake. The company plans to license the technology to interactive and traditional ad agencies, which will then resell it to large Web-based retailers. MetaCreations recently announced that J. Crew has adopted MetaStream 2.0, the current version. Online retailers can use the technology to present 3-D models of products available for sale.

Currently, licensees pay a one-time fee to use MetaStream 2.0, but with version 3.0, MetaCreations plans to inaugurate a broadcast licensing model in which retailers will pay recurring fees based on how extensively they use the technology and how much value it has provided. The company said that it earned $10.2 million in licensing and services revenue from MetaStream in 1999, compared with $3 million for 1998.

MetaCreations also plans to further develop its MetaFlash technology, which enables relatively inexpensive 3-D scanning. Minolta offers a PC-only digital camera, the Minolta 3D 1500, which incorporates MetaFlash, and Eastman Kodak has announced plans to use the technology in its own digital cameras.

MetaFlash and MetaStream are both derived from technology developed by Real-Time Geometry, a company acquired by MetaCreations' predecessor, MetaTools, in 1997. Later that year, MetaTools merged with Fractal Design, bringing together four previously separate companies: MetaTools, Fractal, Ray Dream (which had been acquired by Fractal), and Specular (which had been acquired by MetaTools). (See the sidebar " MetaCreations: a Chronology.") Each of these companies had been a significant player in the Mac graphics market. But it was the little-noticed Real Time Geometry acquisition that provided the technology on which MetaCreations now plans to peg its future.

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