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Bain Medium Profitability Business Decision

The Big Shot

#Entertainment #Media
ProHub Comment

This case requires candidates to build a profitability framework for the entertainment industry and perform detailed revenue calculations at the theater level. The key insight is breaking down revenue into theaters × seats × fill rate × ticket price × days, then comparing ROI across genres to find which exceeds the 50% threshold.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Our client, Lights Camera Action Entertainment (LCA), is a major movie production house. After a disappointing summer filled with numerous box office flops, the CEO of LCA has approached us to decide which movie the company should release next.

Clarifying Information

  1. What is LCA’s business model? LCA is a production house in the US but release movies across major global markets. They have a distribution network of domestic and international theatres and get a share of the ticket sales.
  2. What movies do they produce? They’ve been in the business for the past decade and have a good mix of movies across different genres.
  3. What happened over summer? The COVID-19 pandemic has wreaked havoc on the movie industry.
  4. What is the financial situation of the company? Even though the company did not have a major hit over summer, the company has ample cash reserves from investors. The board has indicated, however, that they expect a hit soon, or else the CEO will be looking for a new job.
  5. Do they have any financial target? The board is concerned about ROI after the recent flops and has classified a hit as a movie that has an ROI > 50%.