Adobe Creative Cloud business model helping reduce piracy in LatAm

US graphics software company Adobe has seen a reduction in software piracy since the introduction of its Creative Cloud subscription-based model as the more flexible payment model is opening doors to a new market of smaller companies, Fabio Sambugaro, VP Enterprise for Adobe Brazil and South of Latin America, told BNamericas.

Adobe introduced the Creative Cloud three years ago as part of a plan to wean customers off the boxed software of its popular programs, like Photoshop, Illustrator and InDesign, and get them to sign up for monthly, cloud-based subscriptions to access Adobe programs.

Consumers benefit from more regular software updates, which are uploaded directly in the cloud instead of having to wait for new versions to be released in box fashion. The monthly subscription model also allows users to subscribe and unsubscribe at will.

While becoming more competitive, with faster time to market, on the balance sheet the initial results were not pretty.

Revenue fell 7.9% in fiscal 2013, while net profit fell 65%.

But things are starting to turn the corner, Sambugaro said. Quarterly revenue for the past three quarters has been over US$1bn, compared to some US$1.4bn before the introduction of Creative Cloud.

According to Sambugaro, the company will soon be no longer reporting the number of users and seats for its software, but just revenues.

In its second fiscal quarter, ended May 30, Adobe reported 2.308mn paid Creative Cloud subscriptions, an increase of 464,000 subscriptions over Q1.

LATIN AMERICA

In Latin America, the Creative Cloud has attracted companies that have specific projects with a limited timeframe do not wish to buy long-term licenses, but are now prepared to sign up on a monthly basis.

This, in part, has helped lower piracy levels, Sambugaro said, though he could not provide numbers.

"Piracy has fallen. It's hard to measure, but we've seen many companies seeking partnerships that in the past wouldn't have done so," he said.

This applies not only to design companies and editorials, but also large corporations that have not traditionally been attracted to the subscription model.

In fact, to bring the corporate market on board, Adobe has been developing over the last two years a more direct way of dealing with key accounts.

"Two years ago we sold everything through channel partners. But since then, we've been building a new enterprise area where we still use channels, but have key Adobe specialists in charge of big accounts," Sambugaro said.

"For example, in Chile we will have an account manager dedicated to the education market and another one for enterprise, seeking to get closer to the client."