Recently, a few studio partners have inquired as to what their value is at Kinkbomb.com.
For instance, if a studio were to be offered a compensation to close their KB studio, what should that payoff be?
The answer is 30x-40x your monthly revenue. If someone were to offer less than 20x your monthly revenue, then that potential buyer is trying to take advantage of you.
I would compare a studio’s business to a service industry with a technology aspect. This vertical market would easily trade in the 30x-40x monthly revenue or 3x annual.
Studios on Kinkbomb.com have content, marketing, track record, repeat customers, and many other attributes that give your studio intrinsic value. If you close your business at Kinkbomb, there is no guarantee that all or part of that lost revenue would convert to a new location. In addition, the more you limit your venues to sell product, the more you leave yourself vulnerable to a lack of redundancy. If something tragic happened to the executive team of a company, if their site was irretrievably broken by hackers, or if a disgruntled employee simply pulled the plug, anyone that had all their eggs in that basket would be financially crippled.
Your business has more value because it is spread out, and loses value the more risk you accumulate. If you have one store in one mall, and that mall is hit by a tornado, then your business is gone. If you have three stores in three malls, and one is destroyed, you can overcome and rebuild.
This is also the reason KB has never required exclusivity or even suggested it. KB is a tool for studios to use to grow their business. Studios should have as many tools in their tool belt as possible.
If you have any additional questions or concerns about this issue, you can post in the blog and/or email me direct at Joshua@kinkbomb.com.