The worldwide movie industry is worth over $100 billion annually and the focus of a good portion
Question:
The worldwide movie industry is worth over $100 billion annually and the focus of a good portion of popular culture. Develop a model to estimate the profitability for an individual film, using the following information13:
An average US movie costs $72 million to produce and $37 million to promote. Assume this takes place over a 6-month time period.
Domestic box office receipts average $19.6 million and are earned during the first month of a films release.
Foreign box office receipts average about the same as domestic box office receipts, earned during the first 2 months of release.
Home video rentals average 80% of the total domestic box office receipts, and occur an average of 1 month after domestic theatre runs are finished.
Home video sales average 220% of the domestic box office receipts and occur at the same time as the rental income.
Premium pay TV revenues average $7 million/film, occurring over the 12-month period after video sales end.
Network and free cable television revenues average $7 million/film, earned over the 12-month period following pay TV.
Syndication averages around $2 million total, earned over the final 5-year period.
Develop a visualization and a spreadsheet model to estimate the average profitability of a US movie. Measure profitability by the internal rate of return.14
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr