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034Roughly how many cinema tickets are sold in India in a year? Build it from the demand side, then check it from the supply side.Advent InternationalBoston · 2022
Try it first
Before building anything: which order of magnitude feels right?
Show the worked solution
Roughly 0.8 to 0.9 billion tickets a year, on round assumptions. Demand: 1,400 million people, a quarter of whom go in a year, about 2.5 times each, gives about 875 million. Supply: about 9,000 screens, 4 shows a day, 200 seats, 30% full, gives about 788 million. Two routes agreeing within about 11% is the check; every input should be tested against an industry report.
Why build it twice?
If you want to know how many people eat at a canteen each day, you can count students and guess how often they eat there, or count tables, sittings and how full they look at lunch. Either guess on its own could be badly off; if both land near the same number you can trust it. A sizing built from demand and checked from supply catches the assumption that is wildly off, which a single chain never reveals. Interviewers care more about the check than about the final digit.
Demand of 1,400 million people times 25% who go times 2.5 visits gives 875 million tickets, and supply of 9,000 screens times 1,460 shows times 200 seats times 30% occupancy gives 788 million, so two independent routes agree on roughly 0.8 to 0.9 billion. How do you defend each assumption out loud?
Segment before you guess. A quarter of the population going at least once a year is an average of very different groups: urban young adults may go many times, while much of rural India has no screen nearby. Say which segment drives the answer and why your share and frequency are reasonable for it, then give one number. On supply, the interviewer will push on occupancy: 30% is plausible because weekday afternoon shows run thin while weekend evenings fill. The screen count is an assumption to confirm, not a fact to recite.
Input Assumption If you halve it People who go in a year 25% 438m demand Visits per goer 2.5 438m demand Occupancy 30% 394m supply Screens 9,000 394m supply Every input moves the answer one for one, so the honest range is wide and worth saying out loud. A growth investor would go one step further: tickets times an average price gives box office revenue, and food and drink add a second stream on the same visits. Say the limitation: streaming changes how often people go, so a figure built on old habits may overstate tomorrow's market.
Where candidates lose it
The common loss is a single long chain with one unrealistic link, usually that most Indians go to the cinema several times a year, giving a number in the billions with no check. The interviewer then asks how many screens that implies, and the answer falls apart.
The second loss is reciting a screen count or a ticket figure from memory as fact. Present every input as an assumption, explain why it is reasonable, and offer the second route as the check.
What the interviewer asks next
- What average ticket price would you assume, and what does that make the box office?
- How would you split the answer between multiplex and single-screen cinemas?
- Which single assumption would you research first, and where?
Asked at Advent International, Private Equity, Boston, 2022 (Wall Street Oasis):
Market sizing questions, e.g.: how many books were sold this year in the US?
