Background – Case Study For TVOD

TVOD- Transactional Video on Demand – The case study is about our client having TVOD Business i.e. when users buy content on a pay-per-view basis. TVOD offers recently released material for a bunch of individuals – friends, and family.

The internet has impacted the way we engage with each other and conduct social gatherings. It has led to profound innovation in the way we view content.

There has been a worldwide decline in the attendance of the cinema audience. It becomes challenging to get some time for entertainment according to the announced schedule of cinema. Moreover, cinemas are bound to specific locations.

The ongoing pandemic worsens the drop in the audience at cinemas to zero. The majority of the cinemas worldwide have closed, putting the global entertainment industry in pause mode.

The problems mentioned above presented a market gap, and our Client innovatively countered this to give Pay per View experience On Demand through a platform similar to Netflix yet entirely new to the world. It means subscribers can see content as per their requirement, not when it is aired as per the wish of the broadcaster.

Challenges – TVOD Business

Since the company is in the growth stage. Hence, they wanted to know the growth rate of the company, its profitability, churn rate of customers, CAC analysis, and how much they have to put into the marketing budget.

They use Oak Business Consulting services for:

• Financial analysis of the Income Statement
• Projections for 3 to 5 years
• CAC and CLV analysis
• Analyze which product is having huge profitability and Demand.

“Oak Business Consultant helped Transactional Video on Demand Business by creating financial analysis and forecast their 5 years growth and profit. We also examine the company’s Fixed Cost, Expenses, CAC and CLV and Churn rate and compared to the industry average, so it gives insight about their performance.”

Solutions

To resolve this issue faced by our Client, we offered the company very logical solutions and delivered the following in this regards:

a. Market Research:

We conducted market research and analysis to find out the expected costs associated with the research and development of this Transactional Video on Demand (TVOD) platform, along with the likely administrative expenses.

b. Financial Model:

Oak Business Consultant constructed a financial model to predict company-specific revenues realistically projected over the next five years, comparing income and expenses with cash flow expectations to determine the feasibility of the project. Further contents of the financial model are explained below.

Input Assumptions

Oak Business Consultant has helped the TVOD company build a robust financial model.

 

 

 

 

 

OPEX

We meticulously designed OPEX by analyzing the operating expenses of the company based on the Client’s input. We calculated the predicted variable and fixed costs, including content, administration, marketing, and technical expenses.

 

 

 

 

 

 

 

Depreciation and Amortization

We built the depreciation and amortization schedules. The company had a significant investment in intangible assets like software.

The Financials

We prepared an income statement and predicted future income in the years to come according to a revenue model that befits Transactional Video on Demand business. 

 

 

 

 

Therefore, the revenue model incorporates two separate streams, advertisements, and subscriptions. Moreover, in the case of subscription, we eliminated the churn subscribers to get net revenue.

 

 

 

 

 

 

 

 

Moreover, we highlighted the present and expected financial position of the company through the balance sheet.

Key Metrics

We presented vital metrics to portray the operational analysis of the company.

Dashboards

Since we provided the company with a dashboard, it contains graphs that give a snapshot of the expected financial performance. Explain graphically helps to convey the standings better than the numbers.

 

 

 

 

Project Evaluation

The owner wanted to see how feasible his venture could be. We incorporated the equity raised so far, and the expected hurdle rate into the model. Moreover, we conducted a burn rate analysis to determine the total expenses. This helped us to predict the minimum investment that is required for the business to commence operations.

 

 

 

Company Valuation

 

 

 

 

 

 

 

Lastly, we predicted the value of the company with the help of all the relevant details. Hence, The valuation helps attract investors.

3. Results

• They achieve a better insight into the company’s product performance, Cost Analysis, Break-even point, and CAC with Payback.
• We also provide recommendations or steps to take action in the upcoming months for low Fixed cost and Profitability, Average service cost, CAC, CAC Payback Period, and Customer Lifetime Value.
• Oak Projection Model also helped the management to reduce 30% Cost to be in profit and track the Actual and Projected figures to measure the performance.