Holy Angel University

School of Business and Accountancy

Case Analysis: Serena – A Teaching Case on Quantitative

and Qualitative Factors in Relevant Costing

In Partial Fulfillment of Requirements

in Valuations Concept and Methods:

Submitted by:

Submitted to:

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INTRODUCTION

Serena, a theatrical film based on the best-selling novel, featuring Jennifer Lawrence

and Bradley Cooper, two of Hollywood's biggest stars. It was directed by a well-known

director and was released in March of 2015. It is also based on Ron Rash's Serena, a

2008 novel he wrote while teaching at a North Carolina college. Serena was filmed in

the Czech Republic, even though the film was originally planned to be recorded in

western North Carolina in the late 1920s. The film was directed by Susanna Biel, who

has had success with local indie films made in her birthplace, Denmark. In 2011, she

received an Academy Award for Best Foreign Language Film. Despite its tremendous

success, the film was harshly panned by critics, and Serena is largely seen as an

economic catastrophe. The Pemberton family is the subject of this novel, which depicts

a terrible narrative of cruelty and vengeance. Finally, there was a reported production

problem with the film. The film took 18 months to complete because of the fastidious

director and a disagreement between the directors and investors.

STATEMENT OF THE PROBLEM

Serena, a best-selling novel written by Ron Rash, has received positive feedbacks by

the critics and the book-buying public. Due to its popularity, it was then adapted into a

theatrical film under the same title which starred two of the biggest stars in Hollywood,

Jennifer Lawrence and Bradley Cooper. It was also stated that this was directed by an

acclaimed independent filmmaker, Susanne Bier. 

Taking all the information above into consideration, the film was indeed anticipated by

lots of people. But then, when the film was released, the feedbacks are not what were

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expected. It garnered negative feedback from the audiences. It is showed on Rotten

Tomatoes’ data that out of some 13,000 moviegoers, only 24% of that number liked the

film. In addition to that, they have also specified that only 17% of 102 critics left a

positive review on the film. There were numerous critics who’ve expressed their

disappointments. Moreover, it is said that against the initial budget of $25-30 million,

there were only about $5.1 millionticket sales as per the report of Box Office Mojo in the

year 2017. 

With all these negative criticisms and financial losses, it might have been due to the

problems encountered during their production.

1. It was reported that there has been a disagreement between the director and the

financiers. It implies that there might not have an alignment with their vision, as well

as no clear understanding of the kind of movie they were making. This was

considered as one of the pitfalls of the film.

2. Aside from this, a delay also occurred which they claimed to be due to the director

being a perfectionist. 

3. The delay was followed by the problem that there was only very limited theatrical

release. This has been due to the encountered problem of the producers regarding

the lining up distribution.   

4. Lastly, the high expectations from the audience might have an effect on their

reactions regarding the outcome. Not to mention that the production has chosen

Czech Republic as their film location even though the story was set in Western North

Carolina in the late-1920s.

CONCLUSION

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Numerous victorious productions in terms of blockbusters earnings are occasionally

represented as losses which has ended in successful lawsuits for parties who promised

to be reimbursed with a percentage of the film's proceeds. It thus occurs when

Hollywood typically contracts with several organizations for each picture, with the

intention of having these companies bear losses in exchange for a large fee that

accounts for a significant percentage of the loss. As a result, while the production

makes money, these films, including Serena, are money-losers in the grand scheme of

things, particularly when accounting is factored into the equation, which makes a big

difference to everyone who is supposed to share in the profits.

Furthermore, a well-funded production with a correctly allocated budget per subject is

vastly different from one that is not. To begin with, this will reduce the chance of running

out of money. Second, this will eliminate the possibility of having too much money in

one section. Finally, this will aid the firm in determining which areas require the greatest

funding and which do not necessitate the utilization of a large sum of money. Deeper

understanding of the case is that a screenplay that is significantly rushed will have a

significant impact on the film and boost its market valuation.

Nevertheless, despite an incredible cast of talent that includes two of the world's leading

Hollywood actors on the film crew, academy award for best director and storyline

adapted on a popular best-selling novel, Serena is set to be a great hit. Even so, it's

likely that Serena is unfamiliar to the general public. Despite this, the screenplay can be

viewed as a useful eye opener in 21st-century cinematography as well as an

improbable story about how situations can go tragically wrong even though everything

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looks to be fine. The production, as well as the audio effects, were mediocre at best,

and the timing was awful, with sequences not flowing seamlessly from one to the next.

Serena serves as a clear demonstration that this is not just about how much skill is

needed to create such projects; it's also about how countless people with completely

variety of backgrounds must all act admirably or the overall operation will fall apart.

RECOMMENDATIONS

It is very much normal for films, even successful ones, to incur losses when it comes to

their box office revenues as this is also referred to as Hollywood Accounting. Serena, a

best-selling novel written by Ron Rash, has gained mixed feedbacks by the critics and

the book-buying public. The film earned total ticket sales amounting $5.1 million against

an initial budget cost of $25 million - $30 million which paved way a $19.9 to $24.1

million reported losses for the film and thus, there are some alternative courses of

action which are either accepting or rejecting the film. If the production accepted

Serena, they would be incurring a loss of $19.9 million to $24.1 million as a result. If

decided otherwise, to which the production will be rejecting the film, there will be no

effect or changes in their income. The production will incur neither loss nor profit. With

these alternatives, it is suggested to reject the film in order to prevent the losses that

might be incurred. In addition, it was mentioned that there has been a disagreement

between the two parties: director and the financers. This only tells the misalignment of

vision and understanding on the kind of movie they were making and financing.

Therefore, it is recommended that before entering into an agreement with other parties,

it is very important to really convey all necessary information regarding the deal as well

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as the vision. This would minimize any possible conflicts in the future. One of the

problems which made possible the downfall of the film goes to the director being a

perfectionist. Due to this, there was a delay of 18 months in finishing the film. In order to

address this issue and avoid future disagreements, productions are advised to maintain

efficiency in the whole team including the director and other staffs for this would avoid

any mismatches and encounters that may cause any delays or interruptions.

With the rest of the production team, it is necessary to discuss and set out the overall

goal. Strategic planning will assist the entire team in organizing their resources so that

they do not spend their time and effort on anything that crosses their path. The

filmmaking should stay up with the trends news on a daily basis to minimize

expenditures and dissatisfaction with the results. This requires identifying trends,

demographic information, or prospective customers, as well as the associated

expenses. Also, consider hiring marketing intelligence professionals and accountants to

assist in planning, budgeting, and monitoring overall performance, as well as

recommending cost-cutting alternatives. A strong promotional technique will assist the

company in presenting the film it is creating. The company should design an eye-

catching and worth-watching teaser trailer to readily attract and captivate the interest of

various viewers. They should utilize digital marketing campaigns, website/blog creation,

and even traditional marketing such as public distribution of posters and flyers in their

promotional strategy and fund appropriately for this area. This kind of support will assist

people become aware of the film, which will kick off the exposure process. On the other

hand, the company must also supervise the expectations of its viewers before the

release of the film to the public. Viewers attempt to predict and draw conclusions based

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on what they believe will be in the film, and when that does not happen, they are

unsatisfied. The information will spread through word of mouth, and other people will no

longer be able to see the film. This will inevitably have an impact on the film's ability to

create value. Notwithstanding from that, it's also a good idea to plan dissemination

beforehand. Given that the production had some difficulty lining up distribution, a

strategy should be established first. A marketing team can help the film be shown on the

movie theaters and streamed in popular platforms. This company will be in charge of

promoting the picture both domestically and internationally. Collaborating with a good

marketing team will increase the film's revenues and profits. As a result, it's advisable to

start thinking about the marketing plan before starting the casting and shooting of the

said film.