Multimedia Industry: Case Study of Metrodome Group PLC

Licensing, marketing and distribution of material such as motion pictures, television series, etc in digital formats is the principal business of Metrodome Group. In other words, the group’s prime markets are in the sectors of Home Entertainment, Television sales and other upcoming media technologies. Another important operation that contributes substantially to the revenue is “theatrical releases”.

Plans in the Pipeline:

In terms of strategy, the group intends to stay ahead of competition by adopting the following plan of action for subsequent years: Increasing the number of theatrical releases per year and offering most of the productions in DVD format as well. Building a solid infrastructure for easy distribution of the productions through terrestrial and satellites channels is also on the table.

Financial Bottlenecks:

To consolidate its position as the market leader in releasing art house and low budget independent films, a niche market. In this regard, Metrodome is in a position similar to Eicom Plc. So, given the competitive nature of the multimedia industry, Metrodome Group seems to have got the right measure of the areas of improvement, so that the business can be sustained. Let us find out if the company has adequate financial backing to succeed in its plans.

The group’s gross margin percentage has been steadily increasing over the last five years, peaking to a solid 30% in the latest results. With the impending release of such titles as “Lie With Me” and “Shadowboxer”, the management is bullish about the prospects for the coming year. However, during the same period, the company’s overhead expenses have risen 24%. This is basically due to the aggressive recruitment drive and attractive salary packages offered to its employees during the year 2006. Measures have to be taken to curb this trend if profit margins are to be maintained. In a way the Metrodome group is in a similar position to Eicom in the area of overheads. As a result their profit after taxation figures has been dented. The latest interim report shows an inflow of 1,099,000 pounds as its operational cash flow, which is a healthy figure given the size of the corporation.

Increasing number of Product Releases:

The number of film releases has been steadily increasing over the last five years, culminating in six releases in the first 6 months of 2007. This implies a couple of things – that the operational efficiency of its production had improved, and the management is adept at picking the right projects. For example, some of its releases like “Days of Glory”, “Away From Her” and “Water” have become popular hits in the United Kingdom and some other countries of Western Europe.

A breakdown of the group’s total revenue across its portfolio reveals some interesting facts. Though the products the company offers look quite varied in the first glance, nearly 80% of its total revenue is generated from its DVD business. Such a dependence on one product puts the company in risk. In other words, Electric Word’s diverse range of products makes for sustainable and safe model of business whereas Metrodome’s does not. Given how competitive the multimedia industry is, a drastic change in a company’s business model is a tough task. So, to keep its profit levels in the ascendancy, Metrodome has to concentrate on its niche DVD titles market. The management seem to have recognised this reality as a new announcement had been made to release over twenty five budget titles during the later half of this year. Some of these titles include “In2Film”, “MiniMetro”, “Donnie Darko” and “Human Traffic” – all of which received critical acclaim when premiered. By catering to niche markets, the business models of Metrodome and Eicom are somewhat similar.

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