Strategic partnership for creating an online community video-sharing partnership between Dailymtion and Microsoft's Xbox

1. Team B -10
Christophe Ranc Estelle Thomas Francesco Serio
Olivier Laugier Yunqian Zhang

2. PORTER 5 FORCES
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Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
Bargaining Power of Buyers - Medium: 3
Threat of New Entrants - Medium: 3
Threat of New Entrants - Medium: 3
Rivalry – Medium - High: 4
Financial resources to enter the market can be covered by venture
capitalists and business partner
Critical software innovations can claim existing companies
Fixed costs investments are required by the industry to operate with
economies of scale
High brand loyalty and patent/licenses act as entrance barriers
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Bargaining Power of Buyers -Medium:
Big corporations represent large orders
Software competitors often offer buyers to cover
the high switching cost in order to join their own
solutions
Large number of customers in different industries
with limited information availability
Buyers require customization for their clients
experience or internal operations
Rivalry - High: 4
Large industry size and low exit barriers allow software producers to
prosper without having to steal market share from each other
Concentrated market: 4 players control one third of the market
Fast industry growth rate, specially in cloud-based applications
Numerous players for both global and local enterprise solutions
Main competition comes from players with roughly equal size
Bargaining Power of Suppliers - Low: 1
Bargaining Power of Suppliers - Suppliers are
reliant on high volumes: producer can threaten to
cut volume
Low supplier switching cost
Low skill differentiation
Largest software companies tend to round their
offer through upstream integrations
Inputs are not special or rare
Threat of Substitutes - Low: 1
Threat of Substitutes - Low: 1
Major software companies provide a wide range of services
High switching cost for long term solutions underlying operations and
strategies

3. PEST ANALYSIS
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Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
POLITICAL
French Government does not
want a foreign company to
takeover Dailymotion
Tax policy change in France:
end of R&D tax credit
Internet regulation by
Governments (in China for
instance)
ECONOMICAL
Economic turmoil: companies
buy less advertisement
Emergence of Chinese
competitors
Concentration of power in
one player: YouTube
SOCIOLOGICAL
Increasing population
Increasing access to Internet
in emerging countries
Change in the media industry
Increasing leisure time in
emerging countries
TECHNOLOGICAL
Fast innovations: classical
videos could be replaced by
another media (e.g.,
interactive videos)
Easier and easier to
integrate/share videos:
growing market
Patents for video encoding:
internally developed

4. 4
DAILYMOTION OVERVIEW
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
COMPANY PROFILE
Type of website Video hosting platform
Slogan Regarder, publier, partager
Founded March 15, 2005
Owner Orange S.A. (100%)
Employees 180
Offices Paris (Headquarter), London, San Francisco, Tokyo
Departments
Technology, Content and Distribution, Advertising
and Administrative support
KEY FIGURES
o 1st European website
o 31st worldwide most visited website
o 120 million monthly unique visitors overall
o 15 million monthly unique visitors in the U.S.
o Available in 35 countries and 18 languages
o 85% of the audience comes outside of France
Dailymotion is the first European
video-sharing website
BUSINESS MODEL
Content
VOD Premium
Advertising
Distribution
Website revenues come from:
o Advertising, primary source with $50 million
advertising sales estimated in 2012 by Wiesner
o VOD Premium and Dailymotion Cloud

5. 5
SWOT AND TOWS ANALISIS
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
07/12/14
STRENGHTS - S
• Long-term experience, certain customers,
worldwide presence
• Dailymotion Exchange (DMX)
• Lots of partnerships, such as with Pixel Media,
INDMUSIC, AOL
• Strong sport content offering
• Support from Orange
OPPORTUNITIES - O
• Globalization and computerization
• The development in Asia, Latin America
• More and more advanced technology
• No R&D tax in France
• Growth in streaming videos on phones
• Microsoft is in search of a partner to compete
with Google YouTube
WEAKNESSES - W
• Less viewers and categories than YouTube
• No advertising analysis tool like to “You Tube
Insights”
• Less popular outside Europe, and less than
10% visitors are in the USA
THREATS - T
• Political regulations: French protectionism
• Lots of competitors: You Tube, Vimeo, ect.
• Highly competitive for advertises
• Highly changing market and fast innovation
SO Strategies
o Capitalizing on current resources to enter
new markets
o Develop smartphone market
o Invest in R&D
o Cooperate with Microsoft to enter USA
market and get more content and technology
ST Strategies
o Form partnerships with foreign companies
o Innovate technology through partnerships
o Focus on advertisers providing customized
services
WO Strategies
o Seizing first mover advantage in developing
countries; if not, it might lose market share
o More investment in R&D, otherwise will be
lagged behind
o Partnership with Microsoft will expand its
presence in the US
WT Strategies
o If Dailymotion fails to keep up innovation it
might lose market shares
o Losing advertisers due to obsolete technology
or new devices

6. 6
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
COMPANY PROFILE
Type of company
Software Company, also specialized in Video
Gaming (Xbox)
Founded
April 4, 1975 in Albuquerque by Bill Gates & Paul
Allen
Employees 128 000
Offices Redmond, Washington (US)
Departments
Client Division (Windows, Server, Web), Business
Division (Office…), Entertainment & Devices
Division (Xbox…)
KEY FIGURES
o 1st software Company
o US$ 87 billion revenue
o US$ 22 billion net income
o Around 1 billion users (Office & Windows) worldwide (1 in
7 people on the planet)
o 65 Alliance Partners
Microsoft is the world’s largest software maker
BUSINESS MODEL
Client
Business
Entertainment & Devices
Last Acquisitions & Partnerships (2014):
- Salesforces.com (CRM)
- Nokia (Phone) for US$ 7.5 billion
- Mojang (Video gaming) for US$ 2.5 billion
MICROSOFT OVERVIEW

7. 7
STRATEGIC FIT
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
MARKET POWER
MARKET POWER
RISK REDUCTION
Microsoft does not own
anymore any video sharing
website
KNOWLEDGE & TECHNOLOGY
DEVELOPMENT
Google bought
YouTube in 2006
Amazon bought Twitch
2014
Both companies can develop
together a competitive
gaming platform to compete
with Sony (PlayStation)
Acquisition from a foreign
company is unrealizable,
due to French protectionism
Partnership is the solution
Dailymotion is facing
YouTube’s competition and
needs to grow its market on
every continent
MARKET POWER
Dailymotion/Microsoft
Strong Strategic Fit
COST REDUCTION
Both parties can save
cost on developing new
technologies, content
and advertising

8. Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
Strategic Orientation 1 2 3 4 5
Time Orientation Short Term Long Term
Risk Tolerance Risk Taker Risk Averse
Organizational Structure
Structure Centralized Decentralized
Locus of Power Concentrated Diffused
Management Style
Information Flow Wide Narrow
Problem Solving Thinking Acting
Decision Making Collaborative Autocratic
Human Resource Philosophy
Reinforcement Rewards Recognition
Performance Individual Team
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ORGANIZATIONAL FIT
Several similarities in the organizational structure of the two companies

9. 9
BENEFITS FOR A PARTNERSHIP BETWEEN DAILYMOTION AND MICROSOFT
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
q Work together with a worldwide known
software giant allows to:
ü Obtain the necessary financial resources to
boost its international growth outside France
ü Gain the legitimacy to increase its audience in
the US market
ü Increase its global presence to cover fixed cost
imposed by the use of bandwidth
ü Acquire the know-how for specific improvements
for a “unique” user experience
q Re-enter in the video sharing market, after
the shut down of MSN Soapbox video-sharing
site in 2009:
ü Avoiding to invest in the development and
growth of a new platform
ü Aiming at competitors video-sharing market
shares: Google - YouTube,
Amazon - Twitch)
ü Linking the gaming branch with the rest of the
Microsoft ecosystem

10. 10
DAILYMOTION FOR XBOX
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
• Integrating , the new
platform for OpenVOD, PremiumVOD
and XboxVideo
• Creating a direct link between online
and television streaming
• Extending opportunities for new and
existing media partners: NBA, NFL,
NHL, Formula Drift
• Creating an integrated and
customized environment for video
sharing on Xbox platform
• Combining Xbox and Dailymotion
users account
• Developing a community where users
can watch game tutorials and live
gaming tournaments
• Adding the “share button” on Xbox
consoles that directly redirect to
Dailymotion platform

11. 11
DAILYMOTION FOR XBOX
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
Xbox would allow Dailymotion to enter in more than 140 million houses worldwide
59% of which living in North America
Xbox default integrated online video platform
1. Expanding the audience to video gamers
2. Increasing VOD revenues contribution
through an easy access from the console
3. Increasing advertisement spaces opportunities
Improve user experience
1. Implementing a fully integrated and customized
platform for video entertainment (VOD, movies,
video sharing)
2. Riding the social gaming trend creating a
community platform for online video game sharing

12. 12
INCREASING COMMUNITY INVOLVEMENT
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
VIDEO SHARING MONETIZATION
Boost your content visibility while earning up to 70% of the advertising sold for it
Dailymotion.com Social Network Personal Blog Dailymotion for Xbox

13. 13
TECHNOLOGICAL ISSUES (1/2)
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
OWNERSHIP OF THE TECHNOLOGIES
• Dailymotion: Video Formatting and Online Payment System
• Microsoft (Xbox): Integration with existing media channels
RIGHT TO USE
• Rights to use will last as long as the partnership will exist
• Related to Xbox devices
• Potentially expanded to future technologies to be developed: Dailymotion
App as default integrated video sharing platform for all Windows 10 devices
LEGAL ISSUES
• Trademark on
• In case of infringement, sue in the US Court

14. 14
TECHNOLOGICAL ISSUES (2/2)
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
OWNERSHIP OF THE TECHNOLOGIES
• Microsoft (Xbox): “Share Button” and the video sharing platform
• Dailymotion: Community portal
• Dailymotion and Microsoft (Xbox): Users account
RIGHT TO USE
• Rights to use will last as long as the partnership will exist
• Dailymotion has the right to access to Xbox’s users data
• Microsoft (Xbox) has the right to access to Dailymotion’s members data
LEGAL ISSUES
• In case of third party infringement of the joint technology, both parties have
the obligation to work together to find legal protection and defend their
benefits

15. 15
MARKET ISSUES
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model

16. Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
(1) Management representation
– Microsoft: The person in charge of the platform of XBOX
– Dailymotion: the person in charge of the partnership
(2) Identification of resources to be used
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PARTNERSHIP STRUCTURE (1/3)
HR Resources: staff of
Dailymotion (including
GamingLiveTV)
Technology: Dailymotion
Object: maintain operation
of Dailymotion
HR Resources: engineers
of Microsoft
Technology: Microsoft
Object: maintain operation
of Xbox
HR Resources:
Dailymotion and Xbox
each provide half
Technology: Dailymotion
and Microsoft technology
Object: in charge of the
cooperation business
resource resource
Dailymotion Team Coordinating Team Microsoft Team

17. PARTNERSHIP STRUCTURE (2/3)
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
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Mechanisms for possible future business expansion:
Milestones of the commercial agreement
Revenues from the partnership
should cover the “non-recurring
engineering cost”
Then, revenues spitted more in
favor of Microsoft
(60% – 40%)
When revenues hit 10 millions €:
Equal split of revenues,
exclusivity and Microsoft has to
include Dailymotion app on every
gaming related devices
In a second phase:
In a first phase:
Option for Microsoft to acquire minority shares of Dailymotion
(to be discussed with Orange)

18. Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
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PARTNERSHIP STRUCTURE (3/3)
Mechanisms for a partner to
extract itself from the alliance
Partner’s relative dependence on each other:
• Dailymotion: quite high dependence
• Microsoft: quite low dependence
Exit provisions:
• Asymmetric exit provisions: the less dependent party
(Microsoft) should take on a harder exit provision to
mitigate the asymmetry
• Easy exit provisions:
o If the partnership fails to meet its goal for reasons
other than opportunistic behaviors of one of the
partner (e.g. new law regulations…)
o If a partner has violated a specific contractual
agreement
• Hard exit provision: If a partner wants to exit for
strategic direction change and for reasons not directly
related to the partnership
Decision-making process in the event of partner
dissolution and division of assets and technologies
Technologies patents:
• The decision has to be made when the patent is created
and the partner who keeps it has to pay a fee to the
other one
The platforms:
• If the partnership ends because the platform is not
efficient, no one keeps the platform
• If the partnership ends for any other reason: the
partner willing to keep the platform has to pay a fee to
the other one; fee to be determined together at the
creation of the platforms

19. Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
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ALLIANCE IMPLEMENTATION
Managing cultural differences
Impacts:
Source: Hofstede analysis
Recommendations:
• Dailymotion can hire ex Microsoft employees
• American head of Partnership at Dailymotion
• Provide executive/leadership coaching for leaders with
cultural experts
• Partnership kickoff meeting: to engage all the partners in
the definition of the partnership norms statement
(regarding knowledge management, communication,
resources management, conflict resolution, meetings…)
Building trust among partners
Bring guarantees:
• Dailymotion should have clear roadmap of milestones
that they are very sure of accomplishing: Minimum
viable products for demo purposes
• Develop warrants: to guarantee performance targets
Craft a collaborative work plan:
• Document outlining the structure of work for the
partnership with buys in, measurable results and group
accountabilities
Facilitate communication between partners:
• Virtual workspaces & platform for online meetings
(ZohoMeeting, GotoWebinar, …)
• Electronic newsletters

20. 20
NEW BUSINESS MODEL
Strategic Rationale for Partnering Dailymotion & Microsoft Partnership Design Alliance Implementation New Business Model
CONTENT
BROADCAST
AUDIENCE

21. 21
NEXT STEPS
As Windows 10 will be released as the
common operating system for all devices
Incentives to share videos:
Money rewards & discounts for
famous bloggers, gamers and
Xbox live users sharing
Dailymotion videos
Extend the partnership with
Bing:
Bing suggests Dailymotion videos
prior to Youtube’s ones
Play & Watch:
Integrate the possibility to watch
videos (tutorials) when you are
playing Xbox games
Integrate the
Dailymotion app:

22. Thank you
Team B -10
Christophe Ranc Estelle Thomas Francesco Serio
Olivier Laugier Yunqian Zhang