Should CBS prioritize ad-free premium subscriptions or ad-supported free tiers to grow its streaming audience?

Introduction

The trade-off question at hand is whether CBS should prioritize ad-free premium subscriptions or ad-supported free tiers to grow its streaming audience. This scenario involves balancing revenue streams, user experience, and market growth strategies for a major streaming platform. I'll analyze this trade-off by examining the product ecosystem, potential impacts, key metrics, and experimental approaches to inform a strategic recommendation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about CBS's current market position. Could you share how CBS's streaming service compares to competitors in terms of market share and user base?

Why it matters: Helps understand the competitive landscape and growth potential. Expected answer: Mid-tier player with room for growth. Impact on approach: Would influence aggressive vs. conservative strategy.

• Business Context: Based on industry trends, I assume CBS is looking to increase overall revenue. Is the primary goal here to maximize short-term revenue or long-term audience growth?

Why it matters: Aligns strategy with business objectives. Expected answer: Balance of both, leaning towards long-term growth. Impact on approach: Would affect the balance between premium and free tier focus.

• User Impact: I'm curious about CBS's current user segments. Can you provide insights into the demographics and viewing habits of CBS's streaming audience?

Why it matters: Helps tailor strategies to user preferences. Expected answer: Mix of older traditional TV viewers and younger streaming-native users. Impact on approach: Would influence content and pricing strategies for each tier.

• Technical: Considering the infrastructure needed, how scalable is CBS's current streaming platform for handling a potential surge in free tier users?

Why it matters: Ensures technical feasibility of proposed solutions. Expected answer: Moderately scalable with some limitations. Impact on approach: Might necessitate phased rollout or infrastructure upgrades.

• Resource: Given the potential shift in strategy, what's our current capacity for content production and licensing to support either tier?

Why it matters: Determines ability to execute on chosen strategy. Expected answer: Moderate capacity with room for expansion. Impact on approach: Could influence the pace of implementation and content strategy.