PARAMOUNT PICTURES CASE: THE TRANSFORMATION DILEMA

1. What considerartions must you make about when to release your movie?

 Take into account if there are other possible succesful movies whose release dates are close to
ours. When two expected movies are launched on really close dates, the decision about which
one of them chose gets harder for the public and this makes both movies generally are not as
successful as hoped.
 The high seasons: it´s importante to see the seasons in which the attendance of people to
theatres and cinemas increase, like in summer vacations, holidays, etc. In United States, July 1
weekend is the best release weekend of the year since it was the Independence Day long
weekend. Besides a rental fee of around $10,000 theatres charge, they take 10 per cent of tickets
sales in the first weekend and increased this take by 10 per cent each week after the release; for
this reason the opening weekend is vital for the studios.

2. Run a break even analysis: - How many tickets does your company have to sell to break even
(i.e compensate for the cost) in the first week? Please show your analysis

Best Case Scenario:

Ticket Price
% of tickets sold as 3D: 75%
% of tickets sold as 2D: 25%
2D ticket price: $7,89
nº of tickets: $295,000,000*25%= $73,750,000 / $7,89 = 9,347,275 tickets 2D
3D ticket price: $10,89 ($7,89 + $3)
nº of tickets: $295,000,000*75%= $221,250,000 / $10,89 = 20,316,804 tickets 3D
Cost
Production Cost: $195,000,000
Marketing Budget: $100,000,000
Total Cost: $ 295,000,000

Worst Case Scenario:

Ticket Price
% of tickets sold as 3D: 35%
% of tickets sold as 2D: 65%
2D ticket price: $7,89
nº of tickets: $295,000,000*65%= $191,750,000 / $7,89 = 24,302,915 tickets 2D
3D ticket price: $10,89 ($7,89 + $3)
nº of tickets: $295,000,000*35%= $103,250,000 / $10,89 = 9,481,175 tickets 3D
Cost
Production Cost: $195,000,000
Marketing Budget: $100,000,000
Total Cost: $ 295,000,000