Max Partnership Pricing: Valuing a Branded HBO Button on Roku's Remote

You are the product manager for Max, the streaming service from HBO. Roku wants to put a dedicated HBO button on its new remote control. How much should HBO pay for that button? Explain how you arrive at the number. ```hint Value one remote first Work out what a single remote carrying the button is worth to Max in extra margin, from people who sign up because of it and from subscribers who stay longer, before scaling up to a deal price. ``` ### Clarifying Questions - Will the button appear only on remotes that ship with new Roku devices, or will Roku also send updated remotes to existing households? - Is Roku asking for a one-time fee, a fee per remote shipped, or a yearly payment, and does the button stay assigned to HBO for the remote's whole life? - What should pressing the button do for a household that does not subscribe: open a sign-up screen, or only the app's landing page? - Can I use Max's internal figures for revenue per subscriber, churn and acquisition cost, or should I estimate them? ### What a Strong Answer Covers - Pinning down the deal scope: which remotes, how long the button lasts, exclusivity, and what the button does for non-subscribers - A per-remote value model that counts only incremental sign-ups and retention, valued at margin rather than revenue - Labeled, round-number assumptions with correct arithmetic and a sensitivity or sanity check - Separating HBO's maximum willingness to pay from the price it should offer, given Roku's alternatives and Roku's own gains from the deal - A recommended payment structure and the data needed to verify the button's performance after launch ### Follow-up Questions - If Roku insists on a single upfront fee with no performance component, how does your bid change? - A rival streaming service is bidding for the same slot. How high would you go, and what would losing the slot cost Max? - After launch, how would you measure whether the button actually caused new subscriptions and lower churn?