2 Subscription Economy Winners That Still Dominate Their Niches

Key Points

• Driven by the digital transformation, the subscription economy is forecast to grow at a CAGR of 13.3% through 2033.
• Despite its recent losses, Netflix remains the dominant streaming video provider, and with its forthcoming acquisition of Warner Bro. Discover, the stock could see 41% upside over the next year.
• Adobe is down 61% from its 2021 all-time high, but its subscription revenue grew at a 12% clip last year as its software suite continues to fuel top- and bottom-line growth.

Over the past decade, Deere & Company NYSE: DE—more commonly known by its brand name John Deere—has received mounting criticism for its transition to Software-as-a-Service (SaaS). The move indicated a shift in which the company—a manufacturer of agricultural, construction, and forestry machinery—began implementing a restricted-repair model. 

The result: Farmers and other vocations that rely on heavy machinery are forced to use integrated digital technology in tractors and other equipment. The company states that, rather than outright ownership of machines, its customers hold an implied license to operate the software and equipment in tandem.  

While Deere has faced criticism for the move, the company is just one example of the proliferation of the subscription economy—a business model in which firms have shifted to generating recurring revenue from consumers who pay regular fees for ongoing services rather than purchasing products outright. 

There have been numerous successful adoptions of this model, from Instacart grocery delivery provider Maplebear NASDAQ: CART to music-streaming service provider Spotify NYSE: SPOT. But a few companies are so well-positioned that they can be deemed the winners of the subscription economy. And right now, two of them are on sale.

How the Subscription Economy Has Taken Over

Driven by the digital transformation, the subscription economy focuses on captive audiences who are willing to pay recurring fees for personalization and convenience, in turn providing companies with predictable revenues.

The model isn’t anything new. Newspapers are an anachronism in 2026, but the industry embraced the very same practice being used today by gaming companies, telehealth and medication platforms, and mobile app-based rideshare providers.

The difference today is that, rather than paperboys delivering goods and services, the digital services are driving modern adoption. 

According to industry consultancy firm Grand View Research, the digital transformation market size, which was estimated to be valued at $1.07 trillion in 2024, is expected to reach $4.62 trillion by 2030, good for a compound annual growth rate (CAGR) of 28.5%.

While that alone should grab investors’ attention, it merely serves as a foundation for the explosive adoption of subscription models. Grand View Research also found that the global subscription economy market, valued at $492.34 billion in 2024, is expected to reach $1.51 trillion by 2033 based on a CAGR of 13.3%. 

Netflix Dominates Streaming Video and Is on Sale 

Movie theaters are hanging on by a thread, and if you ask executives at Netflix NASDAQ: NFLX, they may tell you the industry is facing a fate similar to that of Blockbuster Video. 

Since the communication services sector's mainstay has grown into a household name, it has amassed a market cap of more than $347 billion. And while competitors—including Amazon’s NASDAQ: AMZN Prime Video and Disney’s NYSE: DIS Hulu and Disney+—have emerged, the ubiquity and track record of Netflix make it the runaway market leader.  

Last year, Netflix reaffirmed its dominance when it announced a deal to take over Warner Bros. Discovery NASDAQ: WBD. In January, that agreement was amended to an all-cash deal in order to expedite the acquisition and counter a bid from rival Paramount Skydance NASDAQ: PSKY. 

The takeover amounts to $83 billion, with Warner Bros. Discovery planning to spin off its networks division—including CNN, TBS, TNT, and the Discovery Channel—into a new public company called Discovery Global. 

That deal sent shares of NFLX lower. Year-to-date (YTD), the stock is down nearly 10%, following a more than 39% slide from its all-time high in June 2025. 

Here’s why that’s good news for prospective investors and current shareholders. The stock’s trailing 12-month (TTM) price-to-earnings (P/E) ratio is 32.53, but its forward P/E ratio is just 3.34, implying that the stock is providing some of its greatest value since its May 2002 IPO. 

Analysts assign NFLX a Moderate Buy rating, but their average one-year price target of $116.08 suggests more than 41% potential upside.

Software’s Sell-Off Means Adobe Shares Are a Bargain 

From semiconductor leases to iCloud storage, the tech sector is no stranger to the subscription model. But the recent sell-off in software stocks has resulted in skittish investors wary of the space. 

That may be true for short-term swing traders, but for buy-and-hold investors looking to acquire shares at a bargain, perhaps no other company in this corner of the market is a better buy-low candidate than Adobe NASDAQ: ADBE.

The SaaS company—famous for Photoshop, Illustrator, Premiere Pro, and Acrobat—has seen its stock fall more than 19% YTD, and since its all-time high in November 2021, ADBE is down more than 61%. 

However, that software no longer offers single-purchase options. Instead, the product suite’s subscription revenue reached nearly $6 billion in Q4 2025, representing a 12% year-over-year increase. 

Overall, Adobe’s recurring revenue has contributed to a five-year annual revenue growth rate of 13.15%. Despite the stock’s slide, annual net income (a.k.a. profit) has grown $4.82 billion in 2021—the year of ADBE’s all-time high—to $7.13 billion in 2025, good for a nearly 48% increase. 

Meanwhile, analysts’ average 12-month price target of $401.13 implies nearly 50% potential upside. The stock’s forward P/E is also attractive at 16.12. Meanwhile, Adobe has only missed earnings once in the past 27 quarters, dating back to Q2 2019.