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The Friday Roundup – CyberLink Responds to Subscription Licensing

Rather than my usual roundup of all things video editing from around the traps this week I wanted to devote this entire post to an issue that has caused quite a stir of late.

The biggest story to break in the field of video editing software licensing for some time has been the move by Adobe to a subscription based model for their top end products.

Whilst this has caused all sorts of angst, hand-wringing and hoopla within the pro video editing / multimedia community there has been little written on what this may portend for the consumer end of the market.

Within the subtext of the move was the fact that maintaining development of high end products such as Adobe CS6 on the basis of a one-off lifetime payment with users updating perhaps yearly or even bi-annually was simply not a business model they felt was viable in the long run.

You can read more about that in this post.

So what does this mean for the rest of us operating at the “home user” or “enthusiastic amateur” end of the scale?

As far as Adobe is concerned my belief is that they really don’t care too much for that segment of the market anyway.

When they say they have no plans at present to extend this model to the home-user products and have no plans to do so in the immediate future I tend to think the real response they had was something like, “The what end of the market? What do you mean by consumer or home user?”

I say this for two reasons.

First because if they were serious about “nurturing” their “Elements” users (Both Premiere Elements and PhotoShop Elements) into becoming full CS6 users, the “Elements” products would look nothing like they do today.

I have ranked Premiere Elements generally at around my fourth choice for a good video editor for the consumer for a few years now… good enough to be included but by no means the best.

Given the vast resources of Adobe I would have thought they could have easily dominated this market not by number of sales, but on the sheer excellence of their product… sadly this is not so.

Premiere Elements is an “OK” video editing choice for the home user but collectively and individually CyberLink, Corel and Magix have been kicking their butt for years now.

In fact if this were a butt kicking competition then Premiere Elements would be the classic example of a competitor having no legs and a huge butt.

The second thing that makes me think this can be seen by just going to their website and trying to find Premiere Elements! It and it’s Photoshop Elements companion are absolutely buried in the bowels of the site, securely hidden from the prying eyes of those pesky consumer customers!

However the fact remains that the subject of lifetime licenses for editing software has been brought to the fore and the points raised about its long term sustainability as a business model are salient.

In light of this I thought I would approach a few of the other software makers at this level to get their thoughts on the situation and the first cab off the rank is CyberLink the makers of PowerDirector 11.

Why CyberLink first?

Because CyberLink not only replied in a timely manner but actually offered up the Senior VP of Global Marketing, Richard Carriere for an interview which I thought was rather nice and to be honest, was way higher up the corporate totem pole than I had expected to reach!

Given my complete lack of interviewing skills I though it more prudent to ask some questions in written form to at least preserve some sort of dignity.

DIY Video Editor: The recent Adobe announcement regarding Creative Suite being retired and replaced with the subscription based Creative Cloud seems clearly aimed at the professional end of the video/image editing market.

Given that Cyberlink tends more towards the consumer end of the market are there any aspects of Adobe’s strategy that CyberLink are considering to adopt themselves?

Richard Carriere from CyberLink: “Subscription-based software is nothing new at the consumer end of the market. Security software is a good example.

Subscription-based cloud or web-content delivery is not a new model for consumers either. Think of storage or premium media contents such as Netflix or Spotify.

As long as there is value or a need for end-users to ensure they have the latest version of the software, or wherever a significant part of the value delivered by a software solution depends on cloud-based components, subscription should be a viable alternative to the purchase of an unlimited license.

In some cases, subscription might soon become the only option.

At CyberLink, assessing pricing and sales models is an ongoing concern of our team.

We are taking a hard look at subscription, its benefits, potential issues and how it could be best implemented as an alternative to the traditional perpetual license model.

Even more important than the potential financial benefits to CyberLink, the key decision driver will lie in the presence of clear tangible benefits of such model for our customers.” 

DIY Video Editor: One of the points raised in the Adobe announcement that was perhaps overlooked was that the sale of software on a perpetual license basis is a business model that is becoming more difficult to sustain in the long term. Would you agree with this?

Richard Carriere from CyberLink: “When, like Adobe, you sell a significant volume of $1,000+ software to budget-constrained creative freelancers, small businesses or students, subscription represents a nice way to lower the buying barriers and to grow your user base.

This is regardless of the addition of cloud services or other elements to your software product that need to be subscription-based by nature. In this case, we would agree that a perpetual license model might not be sustainable in the long-term.

When, like CyberLink, most of your products are priced around $100, the buying barrier is much lower and we should not prematurely announce the death of the perpetual license.

We are likely to see the co-existence of perpetual license and subscription for a long time, depending on the different needs of specific user segments. More options for us and for our customers. This sounds exciting to me!”

So there you have it. A pretty measured response from CyberLink which I think actually exposes the real issues here and what will most likely be the true course most of the home user software makers will follow.

The key to all of this being that this is a very competitive market with no single software maker having a clear advantage from a technical viewpoint that they could possibly leverage into forcing a solution on the market.

As Richard quite correctly points out, the consumer end of the market is a very different proposition to the pro-end in terms of both usage and entry costs and any change will be more monitored by consumer preferences and sentiment than by monetary gain alone.

If you have spent over $1000 just to get access to software then the choice of abandoning that product can be financially quite painful. On the other hand if you are only $100 in the hole and your software company tries to enforce a licensing arrangement on you that you don’t like, at least at our level of the market we have a few good alternative choices.

As much as a lifetime license to any particular type of software may not be an economically viable proposition moving into the future, alienating your existing and potential customers by enforcing a payment system they feel uncomfortable with would be far worse.

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