One way to win the streaming wars is with billions of dollars in marketing, billions more in content investment, huge companies backing you and many years of investment. So far, that's been about the only way.
Struum is trying something different. It's building a streaming service out of streaming services, combining dozens of niche players in a single interface and subscription that it hopes can become much more than the sum of its parts. Lauren DeVillier, Struum's co-founder and CEO, likes to compare it to ClassPass: Subscribers get a certain number of credits each month, which they can use to watch anything they want. The idea is for Struum to become both a discovery platform and a way for viewers to watch what they want without having to finagle free trials and deal with dozens of accounts.
DeVillier joined the Source Code podcast along with co-founder Paul Pastor to talk about the state of the streaming wars, why some things about the cable bundle are worth keeping around, why a bunch of media executives decided to start a tech company, why credits could be key to the future of media and more.
You can listen to our full conversation on this episode of the Source Code podcast. Below are excerpts from our conversation, lightly edited for length and clarity.
I want to know the beginning of the Struum story, because you both have been in this space, thinking about this stuff for a while. What's the nut of the idea that led to Struum?
Lauren DeVillier: I've been in this space for a long time. I was at Microsoft TV working on the IPTV business. And I was at Discovery with Paul, we were at Disney together, and then I went back to Disney+ and was consulting there on their launch. I connected with our partner, Eugene Liew, who owned a large part of the Disney+ stack, and we just started talking about the industry. And then started talking about ClassPass, and it was really not so much about ClassPass, it was the model that really connected for me. And the model is the idea that you can buy credits, and use those credits and really curate your experience.
That's really where the conversation started to happen, around "How do I curate my experience?" For me, when I go into one of these larger services, I am looking for specific things that I want, and you sort of skim across the top of all of these large services and their content. And so what if, as a consumer, I could look across all of those services and pick and choose the things that I wanted to watch? What we saw was that maybe if I go into a specific service, and I start discovering more and more content, I'm likely to stay with that service, and convert into that service. And so that was really where the beginning of the idea started for us. And then quickly, because Paul and I were working so closely together at Disney and Discovery, I quickly pulled him in and said, "What do you think about this?" We went for lunch, and I pitched him three things, and he was like, "That's the one." And that's it.
I would think it would be very easy to be inside Disney, to look at this slew of hundreds of niche, small streaming services, and say, "OK, if we just sit here and wait, in five years, most of these are going to be gone. Ultimately we're going to go from 1,000 players, or whatever it is, to six. And we are pretty confident that Disney is going to be one of them."
But you went all the way the other way and bet on the little guys. Why was that side of this interesting to you, in a world where scale is the thing?
DeVillier: Because there's unbelievable content out there. And they're not getting the reach of consumers that they should be getting. And I really feel like there's all this incredible content that people aren't finding. And we really want to be part of that solution, providing that front door or that porch for consumers to find this content. I was very specific that we wanted to go after these smaller players and shine a light on them.
Paul Pastor: Part of my own history is being a part of the original Hulu team at Disney, and what we understood really clearly is the power of aggregation in that environment. As a standalone, abc.com's business was healthy, growing at a great pace. But when we joined Hulu, our business became a rocket ship. We had so many more digital ad impressions we could serve, so much more time spent, so many more ways to monetize our content. And it's all because consumers do like one place to shop, and the ability of recommendation engines to put more things in front of them they might like. And so that became a very powerful thesis behind what we're building.
DeVillier: If you look at the research, people are finding it increasingly difficult to manage subscriptions, find the entertainment that they want and then balance the cost against that. That is an important piece of this that Struum is trying to solve: We are providing the access to the consumer to see all of these different services, giving them the opportunity to discover it and really then providing the value across all of these different services.
So if you had 20 of the services, as individual services, it could cost you up to like $150, right? Or more! And what we're saying is, we're providing the value to the consumer. So they can serve, we can discover content across all the services. And if they love that — they're diving into one of these services — they might convert and want that subscription. It's that dance between the cost and the content that they want to watch.
One of my theories for years has been that the cable bundle, in a lot of ways, was actually a really good idea. And we kind of threw the baby out with the bathwater in getting rid of cable TV. The problem was that TV providers forgot the internet existed, not that the bundle was a disaster of a thing. And I've seen others compare Struum to a cable bundle for the streaming era. What do you make of that comparison?
Pastor: We like it! I mean, you talk about the cost per hour of content, cable was always a very compelling value proposition. The challenge is all the other services that make your cable bill $300, coupled with the fact that you didn't feel as much control or ownership over that. Especially as sports rights became so expensive, and that increased the overall cost of the bundle.
In this environment, the a la carte environment, we've moved to a place where there's more consumer enablement. How do we build that? What we've done is say, here's a great way for you to be able to explore, understand, discover and seamlessly watch — which is a huge differentiator versus other services — the content you find compelling across the 59 partners that we have today.
But then what we will be shortly delivering is, we say, "Hey, David, you're watching a lot of Tastemade or BBC Select, why don't we move you into subscription?" And we can communicate to you very clearly the value of why it is better for you to be a subscriber. And then we can look at all the other adjacencies, and where we can look at bundling where it's similar to the way you talked about cable. And so there's a sense of enablement, while we also deliver value for our subscribers.
What about the credit system? This is such a new way of thinking about how people pay for content online: How did you land on that as the right way to distribute content?
DeVillier: It really goes back to that fundamental belief that people dip in and dip out of services and content. So it's really giving them the freedom and the power to search and discover that content across all of these services. Because it is how people consume content: They go in and out of different services. And those are the frustrating touchpoints that you're seeing, that you're subscribing to a service for a single experience. So that model overlaid made perfect sense.
Pastor: There's an ecosystem where credits have already been used, right? ClassPass being one model, Audible's another model. We see it in gaming as well. So in some respects, we're extending what we see as a form of currency that allows for a very easy facilitation from discovery to consumption.
The reason why I think the credit model is really important is that we can communicate to consumers that not all pieces of content have the same value. Most content owners say, "I don't want my content commoditized. I want it in a branded environment where I can communicate my brand value, and the thing that I premiered last night is worth a lot more than the thing that's been sitting deep in the library that no one's touched for the last five years." This is a way for us to be able to help those content providers communicate that value, and a way for us to communicate that we understood the differences in that value.
DeVillier: And you see that Disney and other companies are experimenting with that — you have the subscription, and then you pay for the a release of a movie.
Where does live fit into all this? Speaking of things that need new business models and new ways to think about consumption … You could think of credits as the future of pay-per-view. Do you have aspirations to do live sports, or big events like the Oscars, or whatever? How does all that fit into the plan?
Pastor: That's the genius about the credit model, right? We can go everywhere. It's expansive in that respect. We have a platform that has those capabilities already delivered, and then it becomes a matter of prioritization against live, and then how do we think about the business models of that. Same thing for us with kids. Figuring out: What are the appropriate business models for a kids environment? How do we have multiple profiles? We have a lot of things on our roadmap.
This year is really about first coming out of the gate with a preview product, which will have a small selection of the total volume of content that we have available under contract. The second piece is about more platforms, the third piece about profiles to be able to deliver more individualized consumer experiences that enable kids. So those are some of the things that we're focused on at this moment.
And what about originals? The thing that every platform does is start by saying, "We're going to be a good partner to our partners." And then in two years, they're like, "Well, what if we just bought a bunch of shows and did them ourselves, that could be even easier!" And there's a million examples of this happening. Are Struum originals coming soon?
Pastor: Where original content has always played a role, it can be a way to get more subscribers into a platform — that, longer term, grows everybody else's business. We're not even thinking about that kind of original content investment at this moment, but if you think about from a Roku perspective, some of it is about "how do I own more of the economics," but some of it is "actually, by driving conversion by this very shiny object that I put in Originals, I might actually convert more people into the environment, and it's going to create a bigger ecosystem for everybody participating."
Our ethos would be leaning into that, because that's what we're trying to accomplish from a platform perspective. Whether or not we get into original content or exclusives, that's a problem that we'll look at in two or three years, after we've dominated the world with 300 of those services.
It feels like we are sort of simultaneously in a maturing market, but also a very early one. There are some huge players now, but also, everything is chaos and all these companies keep buying each other. What's your sense, as you enter into this market, of where we are on the spectrum of the true shift to streaming?
DeVillier: Oh, I think we're just beginning. You can see all the maturations of what's happening.This happened in the early days with MSN, Microsoft, Yahoo, you know? And we thought we had reached saturation back then! I truly believe we're just in the beginning.
