Lionsgate Entertainment Industry

Decent Essays
Lionsgate entertainment is a home and film entertainment company. The industry is very fast-cycle, product lives are short and thus revenue streams from products are short lived, leading to a need for constant innovation and the creation of new ideas for productions. Due to changes in the general environment, video on demand services have cannibalized the success of DVD sales and rentals of all company’s in the industry, leading to a need for Lionsgate to change aspects of their company to keep up with the growing trend. Competition is intense in this industry, with a handful of major producers whom have great capital resources owning 70% of the market. Lionsgate doesn’t have the resources that most of their competitors have and thus have…show more content…
The debt not only affects profits and cash flows, but have covenant’s associated with the loans restrict Lionsgate future actions via maintaining certain debt ratios not to mention certain covenant’s restrict Lionsgate from starting new business ideas and innovations because of the risk associated with potential failure. As stated earlier, Innovation is needed in this industry and Lionsgate is handcuffed in this and faces huge setbacks in the future. Lionsgate’s financial success is deceptive due to its dependence on The Hunger Game’s film franchise. This franchise generated around 30% of overall company revenues and is about to come to end. Revenues and thus profits will be negatively impacted due to the end of Lionsgate’s most successful Franchise. Lionsgate’s also faces challenges, because of their lack of a sustainable competitive advantage. There’s nothing that Lionsgate can do that competitors can’t do in the future and it leads to a lot of uncertainty and risk which is cause for concern if one wishes to invest in Lionsgate. Even though we wish to not invest in Lionsgate, a movement toward penetrating the on-demand sector of the industry, the creation of more 3D films and the dropping of the now passé DVD department will impact Lionsgate’s performance positively and could potentially lead us to invest in them in the
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