MBI vs Epsilon: Role of Epsilon

This case focuses on the role of Epsilon, represented by its Director of Marketing, in negotiating a deal with MBI, the third-largest car manufacturer. Epsilon is an independent company that originated as a joint innovation project between Saurcia (an auto component manufacturer) and Gramofone (a music company). Epsilon has developed an advanced in-car entertainment system and is aiming to integrate its product into MBI's new compact car, with a potential production of 100,000 units in the first year and 500,000 units over the next three years. The goal is also to eventually enter the Asian market.

Epsilon brings strong relationships with content providers and a highly adaptable system, making it a prime candidate for this deal. However, the negotiation involves several key elements, including licensing fees, per-unit royalties, maintenance and updates, and access to content (offered in tiers: Basic, Selected, Extended, and Premium). Epsilon’s primary challenge is negotiating risk management, as some liability for accidents caused by driver distractions may fall on the infotainment system.  The company insists on MBI bearing the bulk of this responsibility to avoid setting a negative precedent. Additionally, Epsilon is in talks with another auto manufacturer, with a deal valued at €4 million, so the goal is to negotiate a deal with MBI that creates even more value.