You are a Product Manager of a B2C organisation in the gaming space and have partnered with a SAAS solution provider. The provider has a pay-as-you-go SaaS pricing model. Due to the COVID-19 lockdown, you see an unprecedented surge in users which could lead to massive average charges as per the contract. What will be your strategy as a Product Manager to tackle this?

I'd love to get some feedback on how I answered this product strategy PM interview question.

I don't know much about gaming industry, so I have a few questions:

What kind of gaming company is it? Do they make Multi-player game like Fortnite or is it a company that sells games which can be played offline. I presume they make multi-player games like Fortnite where there is a significant network usage.

Is the gaming company projecting a net loss due to overage charges? I assume "yes", because the licensing fees they negotiated earlier would not have taken into account the unprecedented surges.

Is the company anticipating same retention rates for the long term? I assume "No", because people will likely return to their normal routines as the pandemic stabilizes everyone into a new normal.

Assessment:

As a product manager at this company, I would see this as a golden opportunity to gain the most users on the platform and figure out ways to retain them for the long run, while maintaining positive revenue. My tactics will roughly fall into 1) get a better deal 2) reinvent the product to increase the revenue with the new demand. I would go for a combination of these two, but let's consider the following areas:

1. Re-negotiate a new price with the SaaS company
2. Find a cheaper alternative for SaaS solution
3. Build an internal solution that serves the same purpose as SaaS solution
4. Increase the gaming revenue through product and pricing related initiatives:
   1. Price increase: across the platform (increase in subscription prices, newer pricing bundles etc.,)
   2. Introduce new games at a higher price-point based on new gamer personas on the platform
   3. Lean Games: Invest in techniques making the games lean  - e.g., figure out ways to reduce storage and bandwidth usage, efficient load balancing
   4. Price-Per-Usage games: Experiment with price-per-usage model for gamers - in other words pass the cost to the customers
5. Metering Users: Cap the number of new users and put them on some temporary wait-list for the most popular games

Based on the assesment above, I would push for 1) renegotiating with Saas solution provider and 2) invest in making the games lean and 3) running usage-based-pricing experiments to attract and retain new users.

1. CLARIFY: 
   1. Is this contract covering US only v. global? You choose. (Let's assume US only.)
   2. Is the unprecedented surge in users causing charges not covered by the contract (i.e. new market, number of users is not covered by provisions, etc.)? No. 
   3. Could you provide any background on the contract provisions: ex. is it $1 / user under 10K users, $2 /user for $10K+, etc.) or is it a flat fee $1/user? Let's assume flat fee for $1 / active user per month.
   4. Web v. mobile? You choose. 
   5. How does my game earn money (fee to download, in app purchases, ads)? You can assume all three. 
   6. May I assume the fees to the SaaS provider are becoming unmanageable / are bad? Yes. 
2. BACKGROUND: I am the PM of a gaming app. My app uses a third party SaaS provider to distribute the app to individual consumers. My gaming app pays the third party SaaS provider for each user that uses the app $1 / active user per month. 
3. GOAL: Given the recent surge in users due to COVID, I am being charged higher fees each month by the SaaS provider. I need to figure out a way to either increase the revenue / user or find a way to reduce the payment each month to the SaaS provider. 
4. SOLUTIONS: I will divide solutions into 3 options: 1) increase revenue per user, 2) decrease payment to SaaS provider or 3) decrease expenses elsewhere.
   1. Increase revenue per user: 
      1. App Download Cost: Increase cost of app download
      2. In App Feature Purchase Options: Increase options of in app purchases for users. Ex. if users are charged for special features, like changing the dress of their avatar, we can increase options, so more people will buy them.
      3. In App Feature Purchase Costs: Increase costs of in app features to buy.
      4. In App Feature Bulk Discounts: Offer discounts (ex. 10% off) if users purchase X number of features in app. Incentivize them to buy more than they would.
      5. Ad Revenue: Increase costs to run ads in game. Given that usage is increasing we can tell advertisers their ads have bigger audiences / we are owed more. (Would have to account for contracts.)
   2. Decrease payment to SaaS provider:
      1. Renegotiate Contract: Renegotiate contract with SaaS provider to lower costs / user.
      2. Break Contract / Find Alternate Provider: Assuming the contract isn't ending any time soon, break the contract and find an alternate provider. 
      3. Build In House: Build solution to distribute gaming app in house 
   3. Decrease other expenses:
      1. Reduce OPEX: Reduce OPEX elsewhere in the company (ex. payroll, benefits,
5. EVALUATE SOLUTIONS: 

   1. Theme	Solution	Impact to Goal	Cost to Company
      Increase revenue / user	App download cost	Low	Low
      Increase revenue / user	In app feature purchase options	Low	Low
      Increase revenue / user	In app feature purchase costs	Low	Low
      Increase revenue / user	In app feature bulk discounts	Low	Low
      Increase revenue / user	Ad revenue	Medium	Low
      Decrease payment to Saas provider	Renegotiate contract	High	Medium / High (depends on contract costs)
      Decrease payment to Saas provider	Break contract / find alternate Saas provider	High	High
      Decrease payment to Saas provider	Build in house	High	High
      Decrease other expenses	Reduce opex	Low	Medium

6. RECOMMENDATION: Given the prioritization, the best option that is low cost to the company is to increase ad revenue. The company could alternatively try to renegotiate the contract with the SaaS provider, but it may be very difficult to get them to change provisions. If the contract is running out soon, they could renegotiate terms or find an alternate Saas provider in the short term while exploring whether the long term costs of building a Saas solution in house is worth it.