The lasting impact of Adobe’s move to subscriptions

NOTE: Bloomberg Second Measure launched a new and exclusive transaction dataset in July 2022. Our data continues to be broadly representative of U.S. consumers. As a result of this panel change, however, we recommend using only the latest posts in assessing metrics, and do not support referring to historical blog posts to infer period-over-period comparisons.

When Adobe introduced its Creative Cloud subscription service in April 2012, it was unclear how consumers would respond. Would they really adopt Adobe’s new online service over the traditional boxed product?

Following its release, Adobe’s average transaction value dropped from $93 in March 2012 to $40 one year later, reflecting the introduction of the lower-priced offering.

But within a year of the launch, customers had grown 244%^[1], resulting in 50% growth in revenue.

Most importantly, these new customers were sticking around.

As we see in the cohort analysis above:

1. There was an immediate boost to retention^[2].

• +76% in month 1 retention between April and May 2012 cohorts

1. This boost persisted as these cohorts aged.

• Month 2-12 retention increased an average of 125% each month

1. Across cohorts, retention increased in month 12 when customers renew their annual subscriptions, though the effect has been weaker for month 24.
2. Some cohorts are stronger than others (e.g., Nov-Dec 2013^[3]).
3. More recent cohorts have even stronger retention.

With this boost in revenue and healthy customer retention, it’s no wonder Adobe decided to scrap its shrink-wrapped product business altogether and go all-in on Creative Cloud.

To see how long customers need to retain in order to make up for lower initial values, request a demo.

Note: Data reflects consumer spending and is not representative of business spending.