For Hearst's streaming video offerings, should we invest in producing more original content or license popular third-party shows to attract subscribers?

Introduction

The trade-off we're examining today is whether Hearst's streaming video offerings should invest in producing more original content or license popular third-party shows to attract subscribers. This decision is crucial for Hearst's competitive positioning in the streaming market and its long-term growth strategy. I'll analyze this trade-off by considering the business context, user impact, technical feasibility, resource allocation, and timeline implications.

Step 1

Clarifying Questions (3 minutes)

• Based on Hearst's current market position, I'm thinking we might be looking to differentiate ourselves. Could you share more about our current subscriber base and how it compares to our competitors?

Why it matters: Helps understand our competitive advantage and target audience Expected answer: Smaller but growing subscriber base, primarily in niche markets Impact on approach: Would influence content strategy to either broaden appeal or double down on niche

• Considering our revenue model, I assume we're primarily subscription-based. Is there also an ad-supported tier, and how does that factor into our content strategy?

Why it matters: Affects the type of content we prioritize and how we measure success Expected answer: Primarily subscription, with plans to introduce an ad-supported tier Impact on approach: Would need to balance content that drives subscriptions vs. ad views

• Looking at user behavior, I'm curious about engagement patterns. What's the average watch time per user, and how does it vary between original and licensed content?

Why it matters: Indicates which content type is currently driving more engagement Expected answer: Higher engagement with originals, but licensed content has broader reach Impact on approach: Could inform a hybrid strategy or focus on improving one content type

• Regarding technical capabilities, do we have the infrastructure in place to significantly scale up original content production, or would that require substantial investment?

Why it matters: Influences the feasibility and timeline of ramping up original content Expected answer: Basic infrastructure exists, but would need expansion for major increase Impact on approach: Might favor a gradual increase in originals vs. immediate shift

• Considering resource allocation, what's our current split between original content production and licensing budgets? How flexible is this allocation?

Why it matters: Determines our ability to shift resources between strategies Expected answer: 30% original, 70% licensed, with some flexibility to adjust Impact on approach: Would inform the scale and pace of any strategic shift