Adobe’s CC is poised to benefit from digital imaging growth
Adobe's strategic acquisitions and ventures into new areas (Part 3 of 10)
Customers prefer Creative Cloud
As mentioned in the earlier part of the series, marketers consider Adobe’s (ADBE) Creative Cloud to be a premier solution for content creation. According to a survey from RBC Capital Markets and CNET in December 2014, as the below chart shows, 57% of customers said they were very satisfied with their Creative Cloud subscription and 20% said they were satisfied. Also, 89% said that after completion of their first year, they plan to renew their subscription.
The digital imaging market is expected to rise
According to Shutterstock (SSTK), the total market for digital images will be worth $13 billion by 2016. Google (GOOGL) Images and Flickr are also some well-known names in this space. Adobe’s growth not only benefits Adobe investors, but also ETFs like the Powershares QQQ Trust ETF (QQQ), and the Technology Select Sector SPDR Fund (XLK), which have high exposure to Adobe.
Integration with Adobe’s Creative Cloud
Adobe expects to integrate Fotolia into Creative Cloud. The company believes that this acquisition will strengthen Adobe’s presence in the digital publishing and digital photo content space. This integration will allow current and future Creative Cloud (or CC) members to access and purchase Fotolia’s 34 million images and videos.
Adobe hopes to enhance its cloud presence and increase recurring revenues
According to Mark Garrett, Adobe’s chief financial officer, “Adobe loses about a third of its revenue to pirated software”. To stop this, the company is considering a number of options to combat piracy. It has included a feature in its Photoshop that is available only to users who log into the cloud.
In 4Q14, Adobe added 644,000 new Creative Cloud subscriptions. This healthy increase could be attributed to the buying patterns of software purchasers who usually buy software at the end of the quarter and at the end of the fiscal year to get the best deals. Adobe is taking all possible steps to switch to web-based subscription for its Creative Suite 6 from traditional box licenses, so that it has more predictable recurring revenue. Online subscriptions enable customers to have access to the latest versions of software for a monthly payment.
Browse this series on Market Realist:
