SVOD: Case StudySadaf Abbas
Background of SVOD
Ten Time is a Video Streaming company that falls under the SVOD industry. SVOD stands for Subscription Video on Demand is a type of service, where you enter into a subscription agreement, which will then grant you access to the service typically to watch until you unsubscribe, which means to watch with no limits.
Ten-time is in a growing stage, and they are going to expand their reach and looking for fund injection from the investor in the form of equity and bond. The client needs a financial model that depicts his business, growth, and especially its company evaluation so that it gives value to investors.
Solutions regarding SVOD
Input Assumptions for SVOD industry
We built input assumptions of investment both from equity and bond, that client was going take from investor and took the real company’s data of CAPITAL EXPENDITURES, OPEX, and no. of subscriptions.
OPEX and CAPITAL EXPENDITURE structure
We built a tangible and intangible assets list with the date of inclusion that is required to purchase in order for smooth operations. Along with that, we analyzed the operating expenses base on the data that we took from the client.
All variable and fixed expenses are calculated in the sheet, including Salaries, Marketing, Content, Utilities, etc.
Depreciation and Amortization
Oak Business Consultant prepared the depreciation and amortizations schedule because this project requires a big investment for fixed tangible or intangible assets like Networking and software.
Subscription and Revenue model
In the SVOD industry, the revenue is based on no. of subscriptions. We build a detailed revenue model for video and music content with the consideration of marketing and subscription on a monthly basis. Along with that, we also made an account for lost subscriptions as well.
Based on the revenue model and cost structure, we build an income statement for 5 years.
Cash Flow Statement
We built cash flow analysis, which was linked with Income Statement, input assumptions in a way so that there was no need to add in the sheet, and sheet change instantly.
Then we build a third and last financial statement, i.e. Balance sheet, which was also linked with Input sheets and cash flow.
Every business has to know its breakeven point. It helps investors and entrepreneurs to set the mark so that they can put extra effort to cross this point.
We provided him with key metrics, in order to analyze their operational performance.
Graphs speak more than numbers because it helps both the investor or Entrepreneur to see the graphical representation of the projection.
We following graphs in the dashboard sheet
Project Evaluation of SVOD
After completion of all the projections, an Investor and, an entrepreneur needs to evaluate the forecasting model. This evaluation sheet helps them to check the feasibility and viability of the project.
Oak business consultant provided Net present value (NPV), Internal rate of return (IRR), Free Cash Flow analysis, WACC, and payback period as well. Our report will not help them to evaluate the project but also help them to know the equity that investors should take against the investment. Along with that, we provide a proper valuation of the company including Enterprise Value, Market Value, upside value.
Intellectual Property Valuation
The client needs an extra valuation for his company. He needs to know his intellectual value based on his past and future performance.
Oak Business Consultant, also provided him with the detailed formulation of his intellectual property valuation.
Company Valuation in the SVOD industry
Last but not least, the client need, the client also wants his company valuation base on his 5-year future earnings, so that it helps him in front of an investor.