Round 1 Mini Case Prompt: You are the new CEO of StreamMax, an ad-based TV service. Your team is debating the future of "The Analyst," a crime drama that has been running for three seasons. They need your help deciding whether to cancel the show or renew the contract and keep it running for another two years.
Interviewer notes: The network's primary goal is to make money through ads and subscriptions.
Phase 1: The network is considering signing a two-year contract for a new show, Shark Bank, for the next 2 years. Shark Bank is a reality TV show where aspiring entrepreneurs pitch their business ideas to a panel of wealthy investors, known as "Sharks," who decide whether to invest in their ventures.
Q1. Which venture would be more profitable?
Annual Financial Report
The Analyst
Viewer per season - 5,000,000
Revenue per viewer - $15
Cost of distribution- $50,000,000
Startup cost - n/a
Shark Bank
If successful:
Viewer per season - 7,000,000
Revenue per viewer - $15
Cost of distribution - $60,000,000
Startup cost - $20,000,000
Shark Bank
If Failure:
Viewer per season - 4,000,000
Revenue per viewer - $15
Cost of distribution - $60,000,000
Startup cost - $20,000,000
Q2. Besides viewer numbers and direct revenue, what other factors should be considered when deciding between "The Analyst" and "Shark Bank"?
Phase 2: A competing offer came in. Another company wants to buy the rights of “The Analyst” for the next two years. What should the minimum selling price be?
Beyond 2 years, Shark Bank makes 22 million dollars. However, the network loses 1.5 million viewers if they switch from The Analyst to Shark Bank. Shark Bank’s revenue per viewer will change to $32.
Final recommendation?