Why cant adobe have the best of both

[Craig Seeman]

I think a big issue was people buying one or more programs and skipping several upgrades. Long range, that wasn’t that profitable for them. A class of people were probably buying every 3 or 4 years. They probably decided that, with CC, some more “part timers” will move to CC and some others would fall off, overall would be a net gain in revenue.

The people who skip upgrades are the least profitable.

[Richard Cardonna]

Well they could have people buying into the cloud. people buying yearly others every 2 or 4 years. what the problem with that? money is money.

Richard

[Walter Soyka]

[Richard Cardonna] “I ask myselfy what could be the ulterior motive to abandon tens of millions in potential income if not more. It just doesnt make sense.”

Here’s one possibility: they think they have all the leverage they need to squeeze every last drop of profit from the creative community, and they intend to leave it bloodless and destroyed in a few years with no long-term plan for the continued existence of their company after devouring all their customers, vampire-style.

Here’s another: they actually believe that providing good products and integrated services to the creative community better meets the challenges of modern production than the current product-only model, and that by making a compelling offering at a fair price, people will actually be willing to pay for it.

I really don’t think that CC is just a new way of paying for CS. I think there’s going to be a lot more to it than that a couple versions hence, just as Creative Suite added integration across what were previous disparate products over a few releases.

Walter Soyka
Principal & Designer at Keen Live
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
RenderBreak Blog – What I’m thinking when my workstation’s thinking
Creative Cow Forum Host: Live & Stage Events

[Richard Cardonna]

It still doesnt make sense. if they want to make money they should have all the options availabe.
You know a couple of hundred here a couple of hundred there plus the cloud adds up.
If they want to tread new ground they should be reminded of fcpx.

Richard

[Craig Seeman]

[Richard Cardonna] “Well they could have people buying into the cloud. people buying yearly others every 2 or 4 years. what the problem with that? money is money.”

If a lot of people were skipping upgrades it hurts case flow needed for development. While I don’t know the numbers imagine, for example, only 1/3 of the owners upgraded after a new release, another 1/3 skipped one and, another 1/3 skipped two. With a large number skipping releases then, on a long development cycle it really hurts.

In the last few years Adobe had been making changes to their upgrade policy by increasing the price if one skipped releases. Of course that meant the more you skipped, the more you were “penalized” meaning you’d be even less likely to upgrade.

They had to put a stop to that due to the economics especially since they wanted to be more, not less aggressive with upgrades after FCP7 EOL. They were faced with looking at a method to upgrade more frequently and ensure a steady cash-flow, knowing they’d have steady and predictable revenue.

Professional users, businesses that make their income from their apps, would see the new model as means to spread out costs. It prevents a cash strapped but professional user from holding off on an upgrade. It also means if you’re holding off on a hardware upgrade or locked into a work cycle were an upgrade doesn’t make sense at a given moment, you’re still paying for it. Basically Adobe gets the money whether or not you have reasons to hold off on an upgrade.

On the other side, there’s the businesses that stick with older version for a long time. Don’t upgrade until they upgrade hardware. Serious hobbyists who buy and use a version for a few years since they don’t have an urgent need to upgrade. Maybe the indy filmmaker who doesn’t have to worry about projects coming in from the outside they have to be compatible with. All these “customers” are marginal revenue for Adobe.

What they’ve done is pushed people to make a decision. In addition to the 1/3 that would upgrade anyway, maybe they pull in the 1/3 that would skip one upgrade but lose the other 1/3 that would skip two upgrades.

Overall a gain in revenue for Adobe. They have steady and predictable revenue. Upgrades are paid for even if you have reason to hold off.

So some embrace it even if they’d prefer not to. And some will look elsewhere. Overall Adobe is more stable. There’s no risk of an upgrade being perceived as weak or not offering the features you’d really want to do a big paid upgrade to. They have you steady.

I’m sure they waited until this point because they had a pretty good idea of how CC subscriptions were growing and had some idea what the “churn” rate would be.

Additionally even those with casual needs, rather than hanging on to an older version, will have to pay for the month to use the app temporarily. All those who only use Photoshop or Illustrator to tweak a client’s file are now at least piecemeal revenue.

As I’ve said before, these companies are businesses, not “friends” you can “trust.” Adobe did this because it made economic sense for them. For those who were not regular upgrades, the “churn” is the least profitable users.

So where does one go? Avid’s an NLE. It doesn’t replace After Effects or Photoshop.
Apple gives Motion a serious going over?
Pixelmator development increases?

A lot of people have to move to CC. Others will look for alternatives. While not quite the same as FCP7 EOL, Some will search for alternatives. The market may or may not respond.

It really does make sense for Adobe even if it doesn’t make sense for a portion of the user base.

[Craig Seeman]

[Richard Cardonna] “It still doesnt make sense. if they want to make money they should have all the options availabe.”

I don’t think it made sense to offer an option to skip and upgrade. Now, even if you have reason not to, lack of new hardware, uninteresting new features, you keep paying. It makes good sense for them financially.

[Richard Herd]

QUESTION: [Richard Cardonna] “I ask myselfy what could be the ulterior motive to abandon tens of millions in potential income if not more. It just doesnt make sense”

ANSWER: Rentier Capitalism https://en.wikipedia.org/wiki/Rentier_capitalism

Quoting, “he soon arrives to the understanding of capitalism as inherently built upon practices of usury and thus inevitably leading to the separation of society into two classes: one composed of those who produce value and the other, which feeds upon the first one.”

[Richard Cardonna]

I agree with you in almost al you state but it still does not explain why cant adobe offer options for all it will make more money having the cloud and perpetual licences plus upgraders that invest evey year or not.

Richard

[Herb Sevush]

[Craig Seeman] “I don’t think it made sense to offer an option to skip and upgrade. Now, even if you have reason not to, lack of new hardware, uninteresting new features, you keep paying. It makes good sense for them financially.”

What your leaving out of consideration is market share. Yes it might be more immediately profitable to cull the bottom third and force the rest to upgrade more frequently but they do this by reducing market share which, in an interconnected market like this, brings in new economies – FCP really took off when everyone saw that it was the platform to partner with. The more people that use an NLE, the larger the ecosystem, the more valuable it becomes, the more people will buy it. If you are correct about their reasoning then they are very short sighted.

Herb Sevush
Zebra Productions
—————————
nothin’ attached to nothin’
“Deciding the spine is the process of editing” F. Bieberkopf

[Craig Seeman]

[Craig Seeman] “Pixelmator development increases?”

Pixelmator responds in their blog.

Cloudiness
https://www.pixelmator.com/blog/2013/05/07/cloudiness/

Big excerpt

We’ll prove ourselves again later on this week. On Thursday, we will storm the Mac App Store with a free Pixelmator 2.2. Blueberry upgrade for all of our existing customers. Don’t be confused by versioning numbers. This isn’t a minor update—it’s a MAJOR UPGRADE—and it’s great one.

Then, as I mentioned sometime ago, we are on track to ship layer styles later this year. We just wanted to complete this awesome Blueberry upgrade.

After Big Brother’s latest move, I am confident that our philosophy of pricing ($15), ownership (you own the app), and development (focus on creating the world’s best image editing app) are simply the right things to do.