Answer:
CyberPerson 2080
If you make the optimal decision, the amount you will expect to earn from your game is:
= $11.85 million.
Explanation:
a) Data and Calculations:
Expected value of game being a critical and commercial hit:
Probability Gross Revenue Expected Revenue
60% $64 million $38.4 million
35% 28 million 9.8 million
5% 18 million 0.9 million
100% $49.1 million
Value of auctioning game:
Probability Gross Revenue Expected Revenue
25% $5 million $1.25 million
35% $12 million $4.20 million
40% $16 million $6.40 million
100% $11.85 million
Value of keeping game:
Probability Gross Revenue Expected Revenue
100% -$7 million -$7.00 million
30% $49.1 million $14.73 million
25% $12 million $3.00 million
45% $1 million $0.45 million
100% $11.18 million
b) The optimal solution will be to auction the game and make $11.85 million, which is higher than $11.18 million made from keeping the game and doing the marketing and publishing.
