An Interactive Multi-Media Program
PRELIMINARY FEASIBILITY STUDY
The program is a visually sophisticated database which allows access to 7000 years of history illustrated with over 3 gigs of pictures! The available information begins as text on screen and allows the browser to move to specific images that detail and re-create the year or period of interest. However, the best description is a demonstration.
Please do not read further until you have seen what is being offered.
Market Place Overview
There is a growing demand for visually exciting interactive multi-media software. Although this new market is incredibly exciting, the initial products in the field are sorely lacking. We feel that the reason for this is that the products have been designed by ‘techies’ and are therefore substantively boring.
We have created an initial program interface that provides a dramatic view of the quality that entertainment people can bring to the multi-media business. We are computer literate producers of moving images who believe that entertainment programs can be educational and that educational programs must be entertaining. Keeping an eye on the aesthetically pleasing as well as informative and entertaining, our group of film professionals has built our program from the outside-in. As a result, we are evaluating the feasibility for producing interactive multi-media software applications ourselves. Hence, our first project, The Timetables of History.
The first product idea needs to be evaluated for its market and financial potential. It is a program that will be of particular interest to those seeking information and images about particular times in the last 7000 years of history.
This document is being written to be used purely as a “first cut” and is not meant to be definitive in determining the investment potential of this project.
The conclusion of this analysis will be that the project deserves initial investment for continued development. This investment will be used for product development, rights acquisition and market research.
The two obvious distribution paths for The Timetables of History program are retail distribution and specialist/education distribution. The products required for these markets could be quite different from one another and may in fact need to be so.
The technology presently required to run the kind of sophisticated application we envisage demands that the market focus be limited to those buyers who can afford the technology: institutions and specialists. The retail market can then be addressed in later years. With present trends, we estimate that a retail product could be released in two years.
Therefore, it is clear that the investment window is narrow. There is now a fine opportunity to develop product successfully during the next two years and use this success to launch a retail line.
Besides the market benefit of this approach, we also realize that any start-up venture in a complex software business must not become too ambitious before it’s systems and operations are running very smoothly. The jump to becoming a retail provider is a big step and must be planned for properly.
Some important facts and assumptions:
• There are about 1700 U.S. colleges and universities.
• There are about 5000 high-priced educational media buyers in U.S. grade schools and high schools.
• There are 5000 U.S. libraries in the high-priced media market.
• There are probably no more than 10,000 businesses who use media enough and have large enough budgets that they can afford the technology.
• The U.K. market can be estimated as one-fifth of the U.S. market.
• Canada, Australia, South Africa, New Zealand and other English speaking territories represent another market which is equivalent in size to the U.K.
Distribution into institutional markets is scattered and difficult. No one distributor reaches everyone. Most only sell into 30-50% of the market. Therefore, multi-channel programs are required or all estimations must be lowered to account for this fact.
• Possible retail sales for a ‘high end’ product such as this would probably amount to no more than 65,000.
Source: Distributing Independent Media American Film Institute
For the U.S. then, “the universe” for selling is about 65,000 specific target buyers. The U.K. would add 13,000 and the rest of the English speaking world would be another 13,000 for a total sales estimate for the first English language product of 91,000 units rounded off to 90,000 units. Over a four year period, we are assuming that we can sell 20% of all these markets. Given that these target organizations are already high-priced media buyers as outlined above, a one-in-five sell is probably conservative over the four years. If we estimate 20% sales, then we have unit sales of 18,000.
Further, we will assume that they will sell 15% in year one, 35% in year two, 35% in year three and 15% in year four. This allows for a ramp-up in the beginning and then the entrance of strong competitive product by the end of year three.
The product development and production budget for The Timetables Of History has been estimated to fall between 1.5 and 2.0 million dollars depending on the cost of the base material rights. The actual investment will be approximately $100,000 considering the fact that we will not see a profit until the end of Year 2.
Therefore, the price begins with a cost loading of $37.00 per unit if the initial investment of $100,000 is to be recovered during the two years and we reach our sales estimates of 9,000 units. This is the absolute worst case since we do not have accurate data to date for several vital markets (i.e., newspapers, magazines, television, radio, research facilities, etc.) Much more thought must be given to this.
Presently, the retail products are selling from $.99 to $5.00 with network (multi-user) licenses selling for up to $1,000. This may indicate that we could price the product anywhere between $.99 and $1.99.
Go For It!
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