Native Instruments Insolvency

Music Scene Chat
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This pains me and worries me at the same time. If a legendary company like NI is insolvent, what hope is there for the other, smaller companies?

When I see that an “investment firm” came on board, I know the grave is already being digged - for the hedge fund vultures have landed.

“[27 January 2026] In recent years, the company has undergone several structural changes that have not always been clearly communicated to the outside world. First, the investment firm Francisco Partners came on board, then Soundwide was formed as a merger of Native Instruments, iZotope, Plugin Alliance, and Brainworx. Later, the company returned to focusing on the Native Instruments brand. These changes indicated that the company was undergoing a period of major restructuring.“

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That’s a bummer. They helped define the sound of '00s electronic music.

But I can’t help but think they did it to themselves. They put out Absynth, Massive, Reaktor, Kontakt, blew up the world, then retired to the reading room for a couple of decades. Serum comes out, Massive is no longer the darling and NI’s answer is “buy more Kontakt packs”. Then they push out Massive X in a time when every DAW has better internal tools, along with Vital, Phaseplant, Pigments and all the rest. It was just too little, too late.

That’s an interesting question. I think it’s probably hard out there given the economic landscape, but any company with a good product that can stay small and lean can probably make a go of it. I think NI, besides the lack of innovation, was really a victim of being too large, making too many bad deals and acquisitions, putting too much money into hardware stuff that didn’t appeal like their software and not accurately seeing where the landscape was heading with the internet at large. A smaller, smarter company might have adapted.

The only NI product I have installed right now is Reaktor, and that’s just to pick apart an old patch to migrate into Max. If a new producer asked me for suggestions on what to buy to get started, I don’t think anything NI would be on the list. Obviously my own perspective, but I think it’s telling that all these years and successes later, they don’t have a single relevant product that comes to mind.

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I’m pretty sure the problem is NI has too much debt, monetarily.

I don’t have NI’s financial statements or a timeline of their acquisitions in front of me. But, if memory serves, they’ve done a lot of acquisitions over the last 5 years or so. Izotope, Brainworx, and PA are probably the biggest, but I could be forgetting something. Usually, that is done with debt. If they pulled that debt before covid or shortly after while interest rates were low, they got a great deal. If they continued spending like that as interest rates rose following covid, that was getting more expensive. Alternatively, they might have locked low interest rates in on the original loans, but now those original loans are coming due and they need to refinance (very common in business to not actually pay off a full loan and instead just refi at the end of the term). Interest rates are higher now, so any refinancing is probably going to be more expensive then their original loan. Essentially, one way or another, my guess is they’re being eaten alive on the interest costs stemming from their acquisitions.

Unfortunately, I don’t have this statement in front of me, but I remember them saying something to the effect of “by acquiring izotope we want to be a one stop shop for all the budding music producers out there” (and announcing Komplete Start shortly after). And 5-6 years ago, I think that was reasonable. I remember seeing their market estimate for what they thought growth of their sales would be and thinking “music production would have to become almost as popular a hobby as gaming for that to pan out”, which I didn’t think was super realistic. But at the time I didn’t think it was going to drag the business under because they were at least acquiring independently profitable businesses, probably going to streamline operations/distribution for a bit of extra margin, and be able to pay down their debt one way or another.

Then generative AI happened. I’m not saying that’s replaced music production, nor do I think it’s going to any time soon. BUT, I do think that generative AI has taken a swathe of people who might have gotten into music production and become potential customers for NI (or any other audio software company) and turned them into prompt engineers. And I think that hurt NI the most because they were specifically targeting that new, hobbyist, first time customer. And I think that exact customer is the one who is most likely to see how difficult music production can be at first and decide to just prompt an AI for the song they want to make instead.

So now NI has all this debt, sales aren’t up like they expected, AND they have to refinance at less favorable terms. If they’re going to go through bankruptcy they might get a slightly better deal by getting some of that debt forgiven, but nobody is going to give a company that just failed the rate they got back in 2020 on restructured debt.

I think this pulls most private equity ventures out of the picture because they primarily use debt as their funding vehicle. Their most common move is to use a leveraged buyout, where they take on a bunch of debt to buy the company. Then as soon as they take ownership they put the debt into the company name and make the company pay them back for buying them in the first place. Yes, it is exactly as fucked up as it sounds, I’ve been through one. But as I’ve already assumed the problem is NI has too much debt already, that’s not really a viable strategy.

So, a more likely player would be one of the few bigger companies in music that has the cash on hand (or can issue equity to fund the acquisition, is anyone public or about to IPO in the music space?). Or maybe one of these music AI companies that wants the cred and brand of an established player. Maybe someone doing well adjacent to the creative industry like Adobe? Maybe Ricky Tinez uses some influence at Apple and tells them to pounce on this? IDK. The only difference between reality and fiction is that fiction has to make sense.

If no one aquires them, NI is going to need some fast cash. So I’d expect some selloffs/spinoffs of the things that aren’t printing money for them. At some point you’re left with a core NI business that is too bloated and needs to streamline and modernize their product portfolio. I suspect they’re smart enough to realize that NI is possibly the most troubled part of the business so I think they sell off PA/BX for fast cash and keep IZ to maintain future cashflow while they reorient themselves.

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And agreed I think it’s tough for a lot of creative focus software companies out there right now. NI is apparently the weakest, but I doubt they’re the only ones struggling behind the scenes.

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It may be more insidious than what you suggest (if that’s possible lol). NI was already owned by private equity - Francisco Partners bought them in 2021 after NI’s first round of layoffs and restructuring in 2020. (You may remember the brief renaming to “Soundwide” a few years ago…I seem to remember Benn Jordan and a couple other youtubers doing videos on it).

From what I understand, Francisco are the ones responsible for NI buying iZotope, Plugin Alliance and Brainworx. So daddy cashbags comes in, takes out what amounts to loans in NI’s name as leveraged acquisitions, and is now trying to wipe that debt via insolvency, completely unconcerned that it affects the employees or customers. Typical venture capitalists for ya, I guess.

I did see a suggestion that Akai might be a potential buyer for NI’s software, as they’ve collaborated and apparently the MPC can now load NI/Maschine sounds.

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That’s harsh.

I use Battery 4 a lot, as well as semi-forgotten synths like Rounds or Razor. They are amazing. Of course, Kontakt is also one I use a lot; for example all Output software runs on it. That, and other 3rd party ware. Guitar Rig is also excellent. And their effects are also top-notch. I have NI 14 Komplete Standard, or whatever it’s called, and Ozone, Neutron etc, from izotope I use all the time.

Now, it is true that it is bloated. There are many “synths” that really are mostly romplers/soundbanks with light tweaking allowed. I’m probably not using 50% of what’s available because I don’t realy have a need for it, but it’s part of the package.

Massive X is an enigma. The GUI is atrocious and it sounds, well, not great to my ears. I’ve barely ever used it. It was supposed to be this most excellent synth following the initial Massive… and instead it’s just a very forgettable, over-complicated instrument.

:100:

This is what I meant by “the hedge fund vultures have landed”. More often than not, HF are not there to grow a company but to destroy it, amassing as much money as possible in the process before there’s only ashes left.

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This is definitely going to be the thing to watch. When they started placing their products with Plugin Boutique, you could tell something was off - they created many cheap bundles to lure folks in and I thought that was a bit beneath NI, in all honesty.

And speaking of acquiring, here’s hoping this does not become another disaster:

Granted, Reason as a DAW is prehistoric; but the Reason Rack Plugin is awesome, as it lets you use their great synths, players, effects within your own DAW rather seamlessly (at least with FLS 25 it does).

The following tells me that Reason as a DAW will be on the way out sooner than later:

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When I got Reaktor on sale about a year ago for less than $100, I knew something was up. And not just because of almost no updates in the past decade (that part was obvious all along), but because it seemed like there was a big push to get the last adopters on board. Since then, I think I got Massive X for free (let’s be honest, it fucking sucks), OG Massive + FM8 for about $10 apiece, and that’s not even to mention the $15 BYOME / TRIAD combo after the acquisition of some (or was it all?) of the UA stuff. I know good and damn well that there will never be a single update to any of these, but that’s what happens when you show up late to the party.

Obviously as others have mentioned, though, the bigger issue probably has quite a lot to do with their lack of innovation and / or firing some of their best developers (according to some drama I read about the Reaktor debacle) over the past decade, and when factored together it’s pretty difficult to see how they even make money anymore or how they even got themselves into this pickle. Selling out to interests who literally have no creative bone in their bodies – what could possibly go wrong?

I’m hoping that this just creates more room for an indie VST market, kind of like AAA games did. Once games started massively sucking across the board and the lack of passion was just that evident, it seemed like there was a sort of indie-gaming renaissance out of necessity, and with a lot of great prototyping tools, books and other resources on the topic of plugin development being created all the time, this might be the final push (or one of them) that gets people with a few ideas into the spirit of developing their own.

Is this wishful thinking? Probably. When Reaktor and other tools (they’re all dinosaurs now, aren’t they?) start falling into disrepair, it’s going to suck all around. Or worse, they turn into Waves and start charging you for yearly update packages; I’d rather they just quit working, thanks. Where’s Blue Cat when you need them? Help :grinning_face_with_smiling_eyes:

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I didn’t know that. That would explain their flurry of soundbanks instead of synth updates or creation this last decade.

Yet, rather incomprehensibly, they released Absynth 6 in December…!

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It probably is harsh, but I think it’s the reality of the situation, at least from the perspective of someone wanting to buy some VSTs for the first time and the people that recommend them. You are, like a lot of us that’ve been around awhile, already in the ecosystem. You’re comfortable with the products and they’re part of your workflow. That makes sense, as they’re all perfectly fine tools. But with the exception of Reaktor Core, none of them are special or unique or offer something you can’t get elsewhere these days, sometimes for free, and very often built-in to whatever DAW you’re using. Why buy into an ecosystem when you already have it at hand?

On top of that, you’re spending $500 or whatever on Komplete with a company that, even before this latest news, seems to be on shaky ground. Their core offerings have stopped innovating and in a lot of cases stopped being updated. They transitioned from a technology company to a sales company with partnerships and a clearinghouse storefront, and it’s hard to recommend that be the company you buy your audio tech from if you’re not already, given all the other options out there. And that’s just my opinion, but it seems to be overwhelming backed up by the fact that NI can’t move enough product to stay afloat.

I think at it’s core this is a marketing problem. People our age know who NI is because we’ve used their stuff for years. If you’re a 22 year old bedroom producer, you either have never heard of them or they’re “that company that used to be important”. They don’t get coverage on youtube or instagram or wherever, they don’t make Top 10 lists. And I’m guessing that’s because there are so many other options out there that do the same thing from companies like Arturia or UVI etc, and that’s really a bed that NI made for themselves over the years.

Yeah, we’re totally on the same page with how gross all that is. While I think NI created the initial conditions for this situation, the VC involvement basically robs any chance of them turning things around, screws over employees and users, all so a couple of people that have more money than they could ever spend can have a little more. It’s criminal, except that it isn’t for some reason.

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All good points.

What do you think about the Reason being acquired by LANDR thing? I don’t know what LANDR really does, I’m assuming it’s another bullshit subscription-only service, so you never really own anything but they keep bleeding you dry…?

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Haha, that’s great - it’s actually the first thing I thought of, but Waves has been irrelevant for so long I didn’t think anyone would know what I was talking about. But I think they are in a lot of ways the poster child for “days gone by” (along with ProTools) - like anybody gives a shit nowadays about Scheps or Lord-Alge or whoever endorsing a plugin. Just like NI stuff, completely serviceable but totally supplanted by more modern offerings and less cost.

I think it’s already happened. The internet demystified audio/DSP programming and things like JUCE made development easy, and places like KVR are full of people working on interesting things. There’s tons of little boutique VSTs out there by small teams/single developers. Like the fall of big record companies, the democratization and decentralization of the internet means you don’t need an office and secretary and payroll, you just need a github page and a product.

For me, the poster child of this is Neural Amp Modeler. One dude, open source, free, and embarrassingly smokes every other amp modeler out there by a country mile. It was the first to use ML in the modeling process, which all the big names had to rush to play catch-up to add. Cardinal, Vital, VCV, and on and on. We’re at a tipping point where monolithic companies don’t rule the tech, they just rule the marketing.

Cloud-based shit, so yeah, pretty much. I think they started as an ML-based mastering service? You upload your stuff and pick style and platform and it spits back a file. It’s like a decade old so it was pretty innovative for the time, though I never had need of or used it.

They’ve since expanded to a big online marketplace like Splice or Slate - one stop shop for online production. Poking around their website it looks like yeah, monthly charge, plugins, samples, mastering and distribution to streaming services. Sounds like something I want nothing to do with lol

I was never really a Reason user (I had a pirated copy for about a month in the early 2000s), and the only thing I remember about it was that you could flip the rack around and that was cool. I don’t know enough about its workflow or what makes it special to really know what they might do with it. My guess is they’ll extract the bits that make sense (ie they think they can sell and don’t step on the toes of their partners too much) and leave the DAW itself to die. Throwing a bunch of development time into modernizing and updating it seems like a poor choice given the current landscape and options.

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