|Ultimates||IBM Planning Analytics, Revelwood Lightspeed, Revelwood Dynamo!|
When we think of entertainment companies—particularly those in film and TV—and their profits, we often think short-term. How much did a film make over opening weekend? How much was its total box office take? Or what are a TV show’s ratings and what ad rate is it commanding?
But media and entertainment companies have to evaluate and analyze profit based on a film or TV show’s lifetime value (often usually a ten-year horizon). And when you are talking about a major player in the international entertainment market that can become a very complex exercise.
This entertainment company is behind many of the best film franchises in history. The company specializes in work that spans the entire entertainment spectrum, including production of original content, postproduction effects and audio for external clients, licensed products and gaming. The diverse media company wanted to understand the overall lifetime value of a wide range of products, spanning different units of the organization.
Revelwood designed and developed an “ultimates” solution using IBM Planning Analytics that is time-based and captures the expected revenue and costs of film and TV titles and projects the overall lifetime value. The TM1-based system handles revenue and expense planning for launching new titles based on all revenue streams generated including domestic theatrical box, DVD, network TV, pay TV, cable TV and other ancillary markets within any time period. The solution also enables the media and entertainment company to stream costs over the lifetime of any given title, and to match costs to revenues to comply with GAAP standards. This deep dive into the costs and earnings by title also allows the company to determine the film price for post-release to ancillary markets such as distributors.
The company is now able to answer questions such as:
- What is the lifetime value of specific film titles?
- What is the lifetime value of television titles?
- How can we amortize the expenses by title to match projected revenues of that title over the span of ten years?
So while any given film or TV show may quickly disappear from our minds, it has a much longer lifespan from a financial and overall profitability perspective. Now this media company can see and project the impact each and every production can make on the company’s bottom line.