In software, the rise of cloud computing has led to a move away from license-based, locally-hosted desktop products. Instead, there has been a transition to browser-based, real-time collaboration in applications. Advancements in computing have also made incorporating AI models into software possible by allowing compute-intensive models to run on cloud-based hardware. This allows applications to offer features regardless of the quality of the end user’s device.

Meanwhile, video remains one of the highest engagement content mediums, with video apps like TikTok, Instagram, Snapchat, and YouTube being among the 15 most downloaded apps globally in 2023. The global audio and video editing software market is valued at $4 billion in 2023 and is expected to double in the subsequent decade.

At the intersection of those trends are web-based, vertical-specific, collaborative software products like Runway. What Canva and Figma did for graphic and interface design, Runway is doing for video editing. Being able to build compelling narratives in growing content formats like video is important for a lot of businesses to reach their audiences. More companies are therefore realizing the need to make and produce videos of professional quality.

Runway is a web-based editor that allows for real-time collaboration and offers a growing suite of AI tools developed through its research arm, Runway Research. It has lowered barriers to professional video editing by turning formerly tedious and highly skilled workflows into a couple of clicks. Runway aims to expand the accessibility of video production, which was previously outsourced to expensive and slow agencies.

Runway was founded in 2018. Prior to starting the company, co-founder and CEO Cristóbal Valenzuela Barrera spent a lot time understanding computer vision applied to image and video. He was fascinated by new paradigms of computational creativity and what neural techniques might enable artists to do. As a result, Barrera enrolled in NYU's Interactive Telecommunications Program to study computational creativity full-time. He met Alejandro Matamala (CDO) and Anastasis Germanidis (CTO) at NYU while researching applications of ML models for image and video segmentation for creative domains.

In 2018, Runway launched as a models directory that enabled others to deploy and run machine learning models for a variety of use cases. It abstracted the inference and training process with a visual interface. As the model directory and user base kept growing, the team started seeing a usage pattern emerge in video editing. Video editors and filmmakers were coming to Runway because they saw potential in leveraging models to help them automate their manual workflows. As Runway started to build more deeply around video editing using the learnings from its model directory, the team realized they were cutting the time and cost of making videos and democratizing ML-enabled video editing. That's when they decided to commit to building the video editor product.

Today, Runway is a full-fledged video editor that enables real-time collaboration in the browser and has a growing suite of AI-powered video editing and creating features. It is used by hundreds of thousands of users, from hobbyists to professional editors.

Runway Video Editor

Source: Runway

Runway’s main offering allows users to edit multitrack video and audio on a single timeline. The editor features effects transitions, trimming, cutting, audio level adjustment, and title creation, among other standard editing tools. The familiarity of the layout enables easy onboarding for editors.

The editor is browser-based, being accessible through Chromium browsers. Each project can be shared with collaborators, and edits can be done live simultaneously, similar to the workflows in GSuite, Canva, or Figma. The output resolution for finished projects is limited to 720p for the free tier but rises to 4k for paid tiers.

AI Magic Tools

Source: Runway

Runway also offers a suite of AI features called AI Magic Tools. It offers 31 tools as of February 2023, including text-based image generation, color grading, audio cleaning, object removal, image-to-video, and green screening. Three tools that the company features are inpainting, green screen, and motion tracking.

Inpainting: An editing tool that allows users to remove objects from videos by identifying them in a still frame and letting the AI ensure that it follows the mask throughout the scene.

Source: Runway

Green Screen: A tool that allows users to remove backgrounds from videos. This allows for any shot to be masked with a few clicks around the subjects, allowing editors to swap out the background regardless of how the shot was filmed. It can be combined with image generation to generate new backgrounds from text descriptions.

Source: Runway

Motion Tracking: A tool that allows video editors to track the movement of any object with one click. Motion Tracking allows users to select moving objects or persons in the scene and pin logos, graphics, or text that seamlessly follows their trajectory.

Source: Runway

Runway Research

Finally, Runway also produces Runway Research. Runway Research collaborates with major universities to publish AI papers that it then incorporates into its product. It has published papers on object motion tracking, sound-to-video matching, and, most famously, text-to-image generation. Its implementation of Latent Diffusion models, called Stable Diffusion, was a collaboration with LMU Munich and Stability AI. Runway open-sourced Stable Diffusion, with CEO Cristóbal Valenzuela highlighting Runway’s “mission to empower anyone to create the impossible” upon the release of SD 1.5. As of February 2023, Stable Diffusion has been starred over 40K times on GitHub and received over 5K likes on Hugging Face.

Customer

Runway’s primary market is the long tail of creators who want to create and edit engaging video content but don’t have the budget for professional agencies or studios. The company's focus on collaborative editing and AI tools lowers the technical barriers and helps expand accessibility. Runway’s partnerships with schools positions Runway's product to become a more common tool that the upcoming generation of editors learns to use as well.

Video is an increasingly critical avenue for discovery and engagement for small businesses and digital creators, but their budgets would not justify video agency fees. Runway’s simplicity and speed enable employees to produce professional content with limited skill.

For professional editors, Runway simplifies tedious processes, such as rotoscoping. Interviews with professional editors highlighted that Runway does not replace its use of existing editing tools but complements them in specific tasks such as object removal or green screening.

Market Size

Runway sits at the intersection of the video editing software market, valued at $4 billion globally in 2023, and the VFX software market, valued at nearly $10 billion. As the number of creators uploading user-generated content (UGC) to online platforms increases, Runway can capitalize on the growing demand for non-professionals to access professional editing software. 39% of American content consumption is UGC, rising to 56% for teens. Runway's market can continue to grow as the long-tail of content creators continues to expand.

A recent study by LinkTree showed that 207 million global professional creators use digital content production as either a primary or secondary source of income. Over 45% of these creators consider themselves full-time content creators. As video consumption grows, there is a strong demand for tools that enable more rapid video content production.

Competition

For professional video editors, the competition includes the following companies:

Avid: The most expensive and technically demanding editing tool and is considered the gold standard of professional editing, especially for film and broadcast. The use of Avid is an industry standard in Hollywood. It According to the company, the product was downloaded more than 3 million times in 2021.

Adobe: Adobe’s creative suite, especially Premiere and After Effects, directly compete with Runway’s functionality, and are often used in tandem among RunwayML’s professional users.

Apple: Apple’s Final Cut Pro has become a major player in the editing world, with a similar market share to Adobe. The product offers both full-featured editing and special effects for a $399 one-time purchase. Apple’s improvements to its free iMovie product also make it a popular choice among hobbyists.

Runway’s challenge to these incumbents rest on the introduction of browser-first, collaborative editing, similar to how Canva and Figma were able to grow to noticeable market share despite fairly popular incumbents. Beyond those incumbent competitors, social media creators often use mobile native video editors like Slice and CapCut. These offer less functionality than Runway but enable an expanded group of participants. CapCut was one of the most used apps of 2022, with heavy usage for TikTok creators.

Runway uses a freemium business model combined with paid tiers.

Source: Runway

• The free Starter tier limits the resolution, cloud storage, and the number of projects a user can work with. It provides limited access to the AI Magic Tools that have been Runway’s most noteworthy innovations.

• The Pro tier starts at $15/month and provides 4k resolution, larger storage, and unlimited projects.

• The Team tier unlocks more storage and export options for the AI Magic Tools at $35/month. The Pro and Team tiers have a 20% discount for annual subscriptions.

Runway also offers a custom enterprise tier suited more for studios requiring a high degree of security and customization. This provides greater assurances that assets cannot be linked or accessed by others, a concern large studios would likely have over a cloud offering, and enables custom integrations into existing software suites. With studios using tools like Autodesk Maya, which have dedicated workflows that are hard to transition away from, integrations become key to Runways appeal.

As of December 2022, Runway had ~$1 million in revenue. CEO Cristóbal Valenzuela Barrera has mentioned that the product now has hundreds of thousands of users, suggesting a significant amount of free usage as of March 2022.

Runway has also put out case studies with major customers, including the editing team for notable television show The Late Show With Stephen Colbert and the film Everything Everywhere All At Once, which received a 2023 Oscar nomination for Best Film Editing. Numerous major brands have also used Runway for their video production including CBS, Vox, and Google.

Source: Runway

Runway has raised $95.5 million in funding as of February 2023. Lux Capital led a $2 million seed round in December 2018, followed by an $8.5 million Series A in December 2020 led by Amplify Partners. The company then raised a $35 million Series B from Coatue a year later in December 2021. Most recently, Runway raised a $50 million Series C at a $500 million valuation in December 2022, led by Felicis Ventures with participation from Madrona, Guillermo Rauch (CEO of Vercel), Amjad Masad (CEO of Replit), Howie Liu (CEO of Airtable), Soumith Chintala (Co-creator and lead of PyTorch), Lukas Biewald (CEO of Weights & Biases), and Jay Simons (former President of Atlassian).

AI Product Pipeline

Runway’s AI product pipeline has increased the number of AI Magic Tools to 30+ as of February 2023. The company has built a product culture that translates AI research into product features and is well-positioned to capitalize on AI developments for video creation and editing. User reaction to these new features has resulted in the company's product announcement videos garnering millions of views online.

General Purpose Editing

While its main focus is video, it has developed more general-purpose models, most notably the open-source Stable Diffusion text-to-image model. While Stable Diffusion powers the image generation capabilities in its editor, it has also become the most widely used open-source model, powering numerous chart-topping applications and receiving a CoreML release from Apple, allowing it to run directly on Apple Silicon hardware. Runway’s contributions could influence its long-term product direction. Contributing to general open-source developments may be commoditizing its complements, bringing down the overall burden of content production and increasing the need for the services Runway provides.

Mobile-First vs. Web-First

Runway’s focus on the browser has given it an edge in fighting off incumbents like Apple and Adobe. But the same bet may be a smaller opportunity than expected in an increasingly mobile native world. The rise of CapCut, released in 2020 and garnering 357 million global downloads in 2022, highlights the growing demand to create and edit the content on mobile. As TikTok, Reels, and YouTube Shorts grow in popularity among creators, mobile-first editing may dominate the digital content creation stack.

Commoditization of Models

Runway’s product pipeline is unique, but this may not provide a long-run moat as AI becomes ubiquitous in software. The AI Magic Tools, which simplify tedious workflows, is a major draw for its current customers, but it may become a standard feature for all editors as the cost of running models drops. Apple’s release of Stable Diffusion on CoreML highlights the potential of continued hardware advances and model optimization to enable these models to run locally rather than on the cloud, fitting into conventional editors without much lift. Running locally would also drop the marginal cost of usage, improving the economics of traditional distributors.

Runway is bringing the disruption of cloud computing, browser-based software, and generative AI to the video editing market. Their product enables users to create and edit video content quickly and collaboratively, lowering the barriers to creating high-quality creative content at a low cost. It is full-stack when it comes to AI, building not only the interface that enables access to their AI Magic Tools but actively participating in open-source research to expand access to AI.

As video content continues to grow as a format, with Instagram Reels and YouTube Shorts highlighting the focus of major platforms on short-form video, there is likely an increase in the demand for creators to leverage professional editing software. Existing professionals may be more accustomed to locally-hosted software and mobile-first newcomers may opt for mobile apps. Runway’s leadership in AI development, however, continues to differentiate it from the competition, presenting an opportunity to define the future of editing.