News and Stories from Haas DMEC

Haas Digital Media and Entertainment Club explores the “Streaming Wars” in conversation with industry leaders

Wednesday, September 16, 2020


On Monday, August 31st students across the Haas Full-time, Evening & Weekend, and Executive MBA programs convened for the first session in a six-week speaker series produced by the Haas Digital Media & Entertainment Club (DMEC). The series, titled Media and Entertainment: A Changing Digital Landscape, will explore topics including streaming, gaming, podcasts and more.

Monday’s conversation featured interviews conducted by DMEC’s VP Academics, Andres Romero with Michael Chang, Director of Content Planning and Analysis at Hulu; Reza Banki, Chief Strategy Officer at Tubi; and Max Rausch, Product Management and Program Partnerships at Roku. Their conversations explored the “Streaming Wars” currently unfolding in the digital entertainment landscape.

Across these interviews, we were struck by a few key themes that emerged.

There are advantages to implementing a variety of business models:

  • Diversifying models allows you to weather storms and reach different types of customers by leveraging customers’ varied willingness to pay and price sensitivities (like Hulu with ads, and without)
  • If the advertising dollars are out there, ad models enable the capture of some of that revenue
  • Roku originally sold their black box, but have now also found success licensing their operating system to TV manufacturers
  • Tubi’s founders created mode of building the components that would drive scalability from within the system, allowing them not to be dependent on external vendors

There are some key differences in the business models of SVOD and AVOD*:

  • SVOD* business is similar to selling a gym membership – some of the best customers don’t even use the gym
  • In AVOD* model, have to get viewers to notice and start using the platform, and how much they use it matters (one user watches 10 hours, the other watches 1 hour and they have very different values to the company)
  • AVOD presents unique strategic challenges that involve complicated technology
    • At what point in the content will we insert ads?
    • Once the consumer gets to the ad break, which advertiser is willing to pay the most for that ad (auction)?
    • This all happens in the background and can’t interfere with the viewer experience – ie. ads have to have same video quality as the video
  • AVOD requires different strategy in selecting low cost, high value content
    • There’s a lot of money exchanging hands on a Leonardo DiCaprio movie, for example – but the Andy Griffith show is also popular and a particular audience loves and watches a lot of it, so becomes valuable in the ad-supported model
    • To increase ARPU (Annual Revenue Per User), AVOD needs to increase functionality like Instagram where users can swipe to buy – can hugely increase value of a user

Content partnerships and device partnerships will continue to be important:

  • Technology makes everything easier from the consumer perspective
  • Soft launches might be valuable going forward as the speed of this ecosystem makes it hard to do all launches properly
  • There’s an opportunity with soft launches to set customer expectations that things are in beta and the tech may not yet be optimized

There may be some net positives in terms of Covid-inspired industry innovation:

  • PVOD* is an entirely new concept happening now
  • With Mulan releasing PVOD and Tenet releasing in theaters, these will be interesting tests of what consumer demand is
  • There will likely be some learnings in terms of what might turn out to be more effective ways of doing things and some new best practices – ie. cutting big-cast scenes, trying different camera angles

The lead-time to get something on a service is vast and there are varied acquisition routes:

  • 1. Buy a finished good (ie. An idea that comes from outside the Disney/Hulu ecosystem, for example)
    • Ie. someone funds their own show and shops for screeners
    • This is what happens with most indie films (self-funded by independent studios, then sold at Sundance, etc)
    • Indie aggregators – Neon, Anapurna, STX, A24 – buy finished product, market it and re-release it
  • 2. Have a fresh idea and build it from scratch (ie. Hulu’s Handmaid’s Tale)
    • Think of a story that would be a great show
    • See if the rights to develop it into a series are available
    • Work with studio (ie. MGM) and engage them to co-produce (ie. Hulu as lead and MGM as international distribution partner for other territories)
  • 3. Buy a par-baked idea (someone has an idea, they’ve written some scripts, and have some talent attached)

Audience analysis is key dimension in determining content:

  • There’s a process for determining “what type of users would watch this?”
    • Look at subscriber base and see which are healthy/unhealthy, have high churn or low churn
    • Map these content opportunities toward areas of need in your content portfolio
    • Big portfolio model: cross-reference my need vs. what/where supply is – and what opportunities are out there
  • There has been a shift towards requiring more of a data analytics skillset in the industry
    • Today’s skillset: being able to understand SQL, clean the data, import into tableau and create visualizations and dashboards
    • BUT – being able to interpret the data may end up being even more important for business students who are aspiring to leadership positions
    • As a leader, learn how to interpret the data and turn data into recommendations – the creative and strategic parts of interpreting data may go further than the technical skillset of being able to learn code and pull data yourself
  • In the ad-space especially, the more specific you can get about your users the more valuable they become


*Note a few common acronyms mentioned in the conversation:

  • AVOD: Advertising-based video on demand
  • SVOD: Subscription video on demand
  • PVOD: Premium video on demand – Like Mulan release
  • [TVOD: Transactional video on demand – traditional pay-per-view rentals]