Subscription-based stock gains: Netflix, Adobe, MiMedia Holdings

Netflix knows the game: Record numbers and customer loyalty

The streaming service Netflix is one of the best-known subscription-based providers. Launched many years ago with competitive prices, the subscription is now more expensive. Netflix even offers an ad-supported plan to accommodate more price-sensitive customers. The Company also invested early in original content. During the golden 2010s, both the public and the capital markets rewarded this strategy – Netflix spent billions, but in return, it had the series that everyone was talking about. The bottom line was that it was a good deal for Netflix. Since the market was eager to believe promises of growth at the time, the strategy paid off. When the pandemic finally confined billions of people to their sofas, Netflix benefited even more – even new target groups such as older people succumbed to the "pandemic lifestyle."

Although those boom years are now over, Netflix continues to generate strong profits. At the end of 2024, it reached a historic high of 302 million subscribers. A whopping 16 million new customers signed up for Netflix in the last quarter of 2024. Many of them are sticking around. Netflix relies on algorithms that personalize the user experience. According to the Company, customer loyalty based on individual user experiences alone generates USD 1 billion annually.

Adobe: Subscriptions as the basis for mega growth

Even before Netflix was in almost every living room, Adobe made a strategic shift: in 2013, it stopped selling software licenses and rolled out its popular graphics and video programs on a subscription model. Although die-hard Adobe users were initially disappointed and suspected a rip-off, software subscriptions are now standard – there is hardly any alternative. It is therefore hardly surprising that Adobe is on the road to success, thanks in part to its subscriptions. In 2024, Adobe achieved a record revenue of USD 21.51 billion, growing by a whopping 11%. In addition to subscription-based software, Adobe also focuses on cloud services, which are primarily used by professional users. Customer loyalty is high, and the number of Adobe's cloud users has reached 650 million and continues to grow steadily. Most recently, it grew by 25%.

MiMedia Holdings: Cloud services for emerging markets

What Adobe is to power users with a MacBook Pro and a passion for media editing, MiMedia Holdings could be for everyday smartphone users. MiMedia offers a cloud service that provides everything users need in a B2B2C model: storing, processing, or sending photos and documents, and making everything accessible on their smartphone when needed. To achieve this, MiMedia signs contracts with mobile phone providers or retail chains and pre-installs its software on new devices. As soon as users take photos and become active, they begin using the MiMedia app and become customers. MiMedia has entered into a strategic partnership with Walmart Latin America, which includes mobile phone provider Bait with 18.3 million customers.

In addition to South America, MiMedia Holdings has also highlighted Africa as an exciting growth market. There are expected to be 1 billion smartphones in Africa alone soon. MiMedia benefits primarily from the scalability of its business model – the apps are in place and the infrastructure can be flexibly expanded as needed. MiMedia has proven its ability to forge strategic partnerships with potential multipliers, as evidenced by the Walmart deal, if not before.

Pricing power: Shareholders love this business model

Current figures also indicate that MiMedia's approach to securing customer loyalty through subscriptions is proving effective. As the US business magazine Forbes reported back in May 2024, the "subscription economy" is evolving – customer retention is becoming increasingly important. MiMedia has an ace up its sleeve here: Personal photos, videos, and documents are considered highly sensitive. Few users are likely to risk losing this data and are therefore more likely to stick with a proven service. This trend is also demonstrated by the fact that in 2024, 73% of companies with subscription-based models were able to increase their prices. Providers offering reliable subscription services not only build loyalty but also gain pricing power - a key advantage for investors.

MiMedia's shares have recently risen significantly – over a six-month period, they are now yielding a return of around 22%. The Company will present itself to further investors this summer. It is quite conceivable that it will present ambitious plans for the future to potential investors. MiMedia Holdings shares are speculative, but the business model is extremely well-proven. The focus on emerging markets also makes sense. New developments could open up promising prospects for the Company, which is currently valued at around EUR 28 million.