You're a PM for Max, HBO's video streaming service. Roku wants to include an HBO button on their new remote control. How much should HBO pay for this feature?

To determine the optimal payment for a dedicated HBO/Max button on Roku remotes, I would first clarify the scope: is this for all new Roku devices sold, or a specific tier?

My approach would involve a multi-faceted analysis:

1. Customer Value: Assess how this button enhances the user experience for Roku customers, specifically by increasing discoverability and ease of access to HBO/Max content. This could translate to higher engagement and satisfaction.

2. HBO/Max Value: Quantify the benefits for HBO/Max, including:

   • Acquisition: Potential increase in new subscribers driven by prominent placement.
   • Retention: Improved engagement and reduced churn from existing subscribers.
   • Brand Visibility: Enhanced brand presence and top-of-mind awareness.
   • Reduced Marketing Costs: Potential savings on other customer acquisition channels.

3. Roku Value: Understand Roku's perspective. What value does HBO/Max bring to the Roku ecosystem? This could include:

   • Content Offering: Enhancing the overall content library available on Roku.
   • Revenue Share: Potential for increased ad revenue or subscription revenue share.
   • Competitive Differentiation: Offering a premium content partner.

4. Financial Modeling: Based on the above, I'd build a model to estimate the incremental revenue or cost savings HBO/Max would realize from this partnership. This would involve projecting subscriber growth, engagement lift, and potential marketing cost offsets.

5. Negotiation Framework: HBO/Max should be willing to pay up to the net present value of the incremental benefits they expect to gain, minus any discounts Roku might negotiate based on the value they provide to the platform. The final price would be a result of negotiation, aiming for a win-win scenario where both parties see a clear return on investment.