Essay on Business Plan

Finance Prima Cinema illustrated the two main streams where its revenue will come from; one of the streams is by the sale of PRIMA Hardware (PRIMA Movie Player), and the other one is the sale from the movie. In the “Key Assumptions” part, the PRIMA box whole sale price is at $20,000 for North America Market, and the standard movie (not 3-D or early release movie) cost $500 per title for the consumer. However, we have some concerns about the revenues from the streams. The first concern is about the operational income showed in Appendix A, the income for first three year are positive, however, the hardware revenue is a lot more than movie revenue, actually, the cost for Prima Cinema to get the patent from Studio is more than the movie revenue Prima Cinema earned in all three years, which means the reason that income stays positive is because the hardware is earning a lot of profit. The build of Prima box is estimated at $7,000, which includes the manufacture and inventory cost. The wholesale price is $20,000, and in page 16, the quality of the hardware is compared with professional home theater which costs easily over $100,000 – 150,000 per deployment. Thus, Prima Cinema is trying to sell a $7,000 dollar component at $20,000, which worth $100,000 – 150,000. What a great deal! However, the real cost of the Prima box is debatable or the quality is not as good. If the price is not true, which means the cost for manufacturing is a lot higher; the operational income will become negative, because both of the main streams are negative. If the quality of the Prima box is not as good, why would people want it? Why would people buy the service? That would lead the income going to negative also. The second concern is about the size of the data base. The purpose of Prima Cinema is trying to provide easy access to the new released movie for wealth people who do not want to go to cinema. In page 23, Prima Cinema is trying to “consume 15 - 20 movies a year on average in the early years of deployment.” This means there is not much service Prima cinema could provide to people, no one would want to install the hardware for the choice of 15 movies. Customer does not have much choice and that would decrease potential customers. The

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