Are films a great investment opportunity? I believe they are for the best sort of investor. Here’s why. We have written this in a Q&A style to respond to the main questions that prospective investors inquire about whether to invest or not.
1. The reason why film investment an attractive investment opportunity? Will it be as a result of high return or because of the nature of economic? For many investors, our prime return is a major draw, because films do have the potential for a very large return, though you will find a extremely high risk with a lot of big “Ifs”. A film can do well if it possesses a good script, good acting, good production value, has a budget that suits the sort of film this really is, and strikes a chord with distributors or buyers for your TV, DVD, foreign rights, or any other markets. Then, when the film is put into theatrical release, it has the possible to get an even larger audience, though theatrical is not the primary revenue stream for the majority of films, merely the big blockbusters, because the theater owners take about 75% from the box office unless a film enters into an extended-term release and there is a high costs for prints (though an increasing number of theaters are going digital). The need for a theatrical release is much more for the promotional value for gaining other sorts of sales, with the exception of the huge blockbusters.
Despite the opportunity of high returns for a few films, kjammedia inside it for the investment need to recognize that any film investment is a major risk, because many problems can develop from when a film is put into production to when it is finally released and distributed. Theses risks are the film not being completed since it goes over budget and is not able to get additional financing or there are problems on the set. Another risk is the fact that film will not be well-received by distributors and television buyers, so it doesn’t get picked up. As well as in case a film gets a distribution deal, the danger is that there is very little or no money in advance, and so the film will not see further returns. So yes – a film may have a high return, but an investor can lose it all.
As a result, for a lot of investors, other key reasons for investing are more important. They feel within the message of the film. They love and keep the film producers, cast, and crew. They like the glamour of being associated with a film, including meeting the stars and going to film festivals. They see their investment as the opportunity to go to distant locations for filming as well as for promoting the film. And they also see purchasing the film as being a tax write-off, much like giving to your charity.
2. What sort of investment returns can investors can get, since many independent productions are certainly not designed for big screens, where are definitely the sales originating from? If all of the stars align, and there is a good film finished with a reasonable budget and distributors, buyers, and an audience responds, the film could readily earn 4 to ten times its cost, making everyone delighted. A small-budget indy scenario for this particular degree of return may well be a film shot for $50,000-200,000. It might get $500,000-750,000 for any TV sale and earn $1-2 million more through DVD, streaming, and foreign rights sales, even with no theatrical release.
For the majority of films, the key worth of a theatrical release is definitely the PR value of obtaining the film known, so buyers may wish to purchase or rent the DVD and television buyers would want to show it on one of many premium cable movie channels. Also, most films don’t get yourself a theatrical release, and the funds are earned through other channels.
3. What sort of movies usually can generate good profits, because the recent Oscar Awards demonstrate that a huge investment fails to necessary mean big returns? A number of the big blockbusters that pass the $100 million threshold can certainly produce a make money from a successful theatrical release, in both the U.S. and abroad. But whether or not they make a profit depends on their budget. As a result of high salaries of stars which are typical within these films along with other high cost items, including special effects, many blockbusters still might not create a profit. Thus, dollar for dollar, many low-budget indy films might be a better investment, considering that the multiples are higher having a success; there exists more likelihood that a low-budget indy, which is done well at a reasonable budget, is going to be sold to make back it’s money, and the potential for loss is much less.
4. Are documentaries a great investment opportunity? Good documentaries are an especially good investment opportunity, because the costs of making documentaries tend to be less than for feature films. They can be done with a lot smaller crew – even several individuals the sector – one for that camera, someone to handle sound and lighting, and another to coordinate arrangements and get good questions in the field. Post-production can be easier too, with fewer takes and less film to edit for your final cut. Many documentaries are carried out having a budget of $10,000-50,000, which can easily be recouped 5 to 20 times over with DVD, TV, and foreign sales.
5. Are there legal or regulatory restrictions preventing individual investors to participate in in film investment opportunities?
Generally, if you’ve got the cash to invest, the filmmakers will find a technique to legally to give them the cash. Various vehicles include nonprofit corporations, LLCs, private placement memorandums, and loans. A typical requirement would be that the individual hold the funds to shell out funds that might be lost in a risky venture and is advised of the chance of your time and money.
6. Exactly what are the key risks behind film investments and how do you prevent them? The true secret risks behind film investments will be the possible ways to lose all of it when the film doesn’t get completed or doesn’t find distribution. The best way to protect yourself is to assess the potential for the feature film or documentary going in; assess whether or not the budget and expected return is apparently reasonable for that project; and assess whether the producer, director, and others on the film appear to have the knowledge to accomplish and market the film
7. Just how much will be the initial investment required to invest in a film production? A preliminary investment may range from the few thousand to several hundred thousand, depending on the film and how a smart investment swosox structured. For example, some indy filmmakers doing low budget films are finding creative methods for getting funds by inviting investments of $1000-2000 from those engaging in the film, like the actors and crew members. Others have divided up investment packages into $5000 each for 25 investors to increase $100,000. Still others have looked for a couple big investors, who are able to contribute a minimum of $20,000, $50,000, $100,000 or maybe more.
Then is a few investment in position, there might be other types of funds, like GAP funding and incentives from states and cities as rebates after filming is finished. VC funds can also be plausible, particularly after there is some initial investment within the film, in the event the film’s budget will likely be a minimum of $1-2 million.
8. With modern technology advancements, do you know the opportunities for independent and emerging film producers; or are these developments even more of a threat due to piracy and competition?