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Medium Profitability Operations Revenue Growth

Grab your popcorn

#Entertainment #Operations
ProHub Comment

This is an operationally-focused revenue case that requires candidates to diagnose profitability issues in a post-COVID recovery scenario. The case effectively tests understanding of business model components (ticket revenue vs. concessions), operational constraints (staffing levels), and ability to quantitatively compare solution trade-offs using productivity and cost metrics.

Estimated Time 15 minutes
Difficulty Medium
Source IESE
50 / 100
Our client, Cinematron, is the largest movie theatre operator in Wonderland with 40% market share (by box office). After a tough period of COVID, when they had to cut half of their employees just to stay alive, they are finally starting to recover. As clients are returning to cinemas, Cinematron’s leadership is beginning to notice that their financials are not looking very good. They have put on a lot of debt during the COVID crisis, and it is essential that the company is able to service it. Cinematron’s CEO hired you to find the root cause of the problem and figure out how can the company get back on track, being highly profitable same as before COVID.

Clarifying Information

  1. The company has a wide network of cinemas in best malls of Wonderland
  2. Closest competitor has 20% market share. Cinematron’s share was constant, but started to slowly deteriorate in the last couple of months
  3. Revenue structure before COVID – 64% ticket sales, 32% concession, 4% - advertising
  4. Admissions are at around 65% of pre-COVID levels
  5. Cost of sales remains stable with 50% for tickets and 40% for concessions, OpEx very lean after the COVID crisis