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Break down revenue for a subscription streaming service into a metric tree.
How to approach it
Start with revenue equals subscribers times average revenue per subscriber, then break each part down further.
How a strong answer opens
“I'll start with revenue equals paying subscribers times average revenue per subscriber, then break each part down until I reach things a team can move.”
Outline of a strong answer
Try answering out loud for a few minutes before you open this.
- Revenue = paying subscribers x average revenue per subscriber
- Subscribers at period end = subscribers at start + new + reactivated - churned
- New: visitors x trial starts x trial conversion
- Average revenue: plan mix, price, discounts
- Churn drivers: content gaps, price changes, failed payments
- Name which branch a team could move most this year
Where this question usually goes wrong
Stopping at the top two branches, or modeling subscribers without a starting base and churn, so the tree never reaches anything a team can act on.
Learn the method
Metric trees: breaking a goal into parts in Module 2, Metrics and execution.
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