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2014 CMA Board Report (LVG case)

  • Last Updated:
  • Mar 24th, 2015 11:53 am
Newbie
Apr 23, 2014
8 posts
Longueuil, QC
Did anyone use the warehousing information in their quants? We didn't, just wonder if we should.
Member
Jan 19, 2007
415 posts
19 upvotes
ON
How many years did you guys use to test the in-game social gaming pilot?
Newbie
Apr 23, 2014
12 posts
Toronto, ON
Hi all, How did people value APC? I discounted the FCF over 5 years and got a firm valuation of $66M. Anyone get the same?

Also, for the EV/Rev multiple of 1.3, do you multiple it by total annual revenues or total revenues over 5 years?
Newbie
Apr 23, 2014
12 posts
Toronto, ON
I didn't since it only refers to rev from durable virtual goods and you don't know what % of rev is from durable goods and consumable goods.
Jr. Member
Sep 11, 2012
164 posts
96 upvotes
Vancouver
How did you guys caculate downloadable game? I have 29.9M NPV from 2014 to 2017 but I am not sure how to deal with the current investment in AR and lose on sales. Any suggestions are appreciated!
Newbie
Apr 23, 2014
8 posts
Longueuil, QC
flyguy1104 wrote: How did you guys caculate downloadable game? I have 29.9M NPV from 2014 to 2017 but I am not sure how to deal with the current investment in AR and lose on sales. Any suggestions are appreciated!
We got a negative NPV for this one.
Jr. Member
Sep 11, 2012
164 posts
96 upvotes
Vancouver
LG2013 wrote: We got a negative NPV for this one.
Did you use the incremental revenue on those games or the total revenue for those 6 games?
Newbie
Apr 23, 2014
8 posts
Longueuil, QC
flyguy1104 wrote: Did you use the incremental revenue on those games or the total revenue for those 6 games?
NPV of incremental income of 6 games, but we also calculated incremental revenue (new sales and lost sales)
Jr. Member
Sep 11, 2012
164 posts
96 upvotes
Vancouver
LG2013 wrote: NPV of incremental income of 6 games, but we also calculated incremental revenue (new sales and lost sales)
Just trying to have better understanding on this

Revenue: The new revenue - lost on sales

Expense: additional cost - saving on the salary ( lay offed 90 people in total)

Then calculate the use NPV in net earing comparing with initial 10 M investment. Is this how you calculated your NPV?
Newbie
Apr 24, 2014
12 posts
Mississauga, ON
How did you treat the development cost? is this eligible for CEC deduction?
Newbie
Apr 24, 2014
12 posts
Mississauga, ON
Can the development cost be capitalized in this case? I did use incremental revenue and expense for the npv, to answer the previous post
Newbie
Nov 11, 2012
36 posts
1 upvote
Toronto
weve structured as Strat Alts: Downloadabl software, retail contract, purchase mobile co, social game in-house development, restructure
For minor alts: Buy back Kidvid, moving existing games to mobile, sequel
Newbie
Apr 23, 2014
8 posts
Longueuil, QC
a_dulg wrote: Has anyone had any difficulties in calculating the overhead allocation in the in-game advertising issue. They mention that games selling less than 75,000 copies (such as Canadian Dogsled Adventure) don't even cover their share of overhead. I presume the decision to begin advertising in-game would balance the additional advertising revenue with the current loss of the game. Unfortunately, I'm unsure how to allocate overhead! Any ideas?
I am struggling with this too.
Jr. Member
Sep 11, 2012
164 posts
96 upvotes
Vancouver
Can others provide some calculation on downloadable game too?
Deal Addict
User avatar
Oct 24, 2005
1148 posts
492 upvotes
LG2013 wrote: I am struggling with this too.
Make assumptions.
2006 - Pepsi/Frito Lay Win Every Hour Contest - 1279 Entries - Loser!
Newbie
Apr 22, 2014
8 posts
, ON
Yaris104 wrote: weve structured as Strat Alts: Downloadabl software, retail contract, purchase mobile co, social game in-house development, restructure
For minor alts: Buy back Kidvid, moving existing games to mobile, sequel
Are you sure that this is the correct order? I was thinking Strat alternatives: Downloadable software, social game, APC. The operational alternatives: restructuring, retail contract, moving existing games into mobile and sequel and in-game advertising.

What did other groups have?
Newbie
Apr 22, 2014
8 posts
, ON
How did everybody structure their alternatives? Which are the most important ones?
Newbie
Apr 22, 2014
8 posts
, ON
flyguy1104 wrote: Just trying to have better understanding on this

Revenue: The new revenue - lost on sales

Expense: additional cost - saving on the salary ( lay offed 90 people in total)

Then calculate the use NPV in net earing comparing with initial 10 M investment. Is this how you calculated your NPV?
Yes that is how my group calculated. How did you structure your report? What is the strategic alternatives?
Deal Addict
User avatar
Jul 7, 2008
1643 posts
563 upvotes
Toronto
LG2013 wrote: I am struggling with this too.
I treated it as just management saying that. How many cases have we done, where somebody in the case boasts, "This option will be extremely profitable for us," only to have a proper analysis show that the NPV is negative.

As for the overhead allocation, I just took the costs and made assumptions on which could be variable, and which could be fixed. My allocation rate was based on the number of units.
Sr. Member
Oct 16, 2008
997 posts
182 upvotes
Toronto
Downloadable games... had a ridiculously negative NPV.... made all the assumptions i could lol

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