Are films a great investment opportunity? I think these are for the right kind of investor. Here’s why. We have written this in a Q&A style to answer the key questions that prospective investors find out about whether to invest or not.
1. The reason why film investment an attractive investment opportunity? Will it be due to the high return or due to the nature of economic? For many investors, the top return is a big draw, because films do have the potential to get a very large return, though you will find a extremely high risk with a lot of big “Ifs”. A film can do very well if it possesses a good script, good acting, good production value, features a budget that fits the type of film this really is, and strikes a chord with distributors or buyers for the TV, DVD, foreign rights, or any other markets. Then, in the event the film is put into theatrical release, it offers the possibility with an even larger audience, though theatrical is not really the main income source for many films, only the big blockbusters, since the theater owners take about 75% from the box office unless a film enters into a long-term release and there is a high costs for prints (though a lot more theaters will be going digital). The price of a theatrical release is a lot more because of its promotional value for gaining other kinds of sales, except for the massive blockbusters.
Despite the chance of high returns for many films, kjammedia inside it for the money must realize that any film investment is a big risk, because many problems can produce from the time a film goes into production to after it is finally released and distributed. Theses risks are the film not being completed since it goes over budget and struggles to get additional financing or you will find problems on the set. Another risk would be that the film will not be well-received by distributors and television buyers, so that it doesn’t get found. Or perhaps when a film receives a distribution deal, the danger is the fact there is little or no money up front, so the film will not see further returns. So yes – a film can have a high return, but an investor can lose it all.
As a result, for many investors, other key reasons for investing tend to be more important. They feel in the message in the film. They enjoy and secure the film producers, cast, and crew. They love the glamour to be associated with a film, including meeting the stars and likely to film festivals. They see their investment as an opportunity to travel to distant locations for filming and for promoting the film. And they also see making an investment in the film as a tax write-off, just like giving to a charity.
2. What kind of investment returns can investors can get, since many independent productions usually are not created for big screens, where are the sales originating from? If each of the stars align, and there is a good film finished with a good budget and distributors, buyers, as well as an audience responds, the film could readily earn 4 to 10 times its cost, making everyone very happy. A small-budget indy scenario for this amount of return might 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 price of a theatrical release is definitely the PR value of having the film known, so buyers would want to purchase or rent the DVD and TV buyers will want to show it on among the premium cable movie channels. Also, most films don’t obtain a theatrical release, and the funds are earned through other channels.
3. What sort of movies usually can generate good profits, considering that the recent Oscar Awards demonstrate that a huge investment will not necessary mean big returns? Some of the big blockbusters that pass the $100 million threshold can certainly make a benefit from an excellent theatrical release, in both the U.S. and abroad. But whether they make a profit depends on their budget. Due to the high salaries of stars that are typical within these films and other high cost items, including effects, many blockbusters still may well not create a profit. Thus, dollar for dollar, many low-budget indy films may be a better investment, because the multiples are higher using a success; there exists more likelihood which a low-budget indy, that is done well at a reasonable budget, will likely be sold making back it’s money, and the potential for loss is far less.
4. Are documentaries a good investment opportunity? Good documentaries are an especially good investment opportunity, because the costs of producing documentaries are much below for feature films. They can be finished with a significantly smaller crew – even several people in the sector – one for that camera, someone to handle sound and lighting, and the other to coordinate arrangements and inquire good questions within the field. Post-production may be easier too, with fewer takes and much less film to edit for the final cut. Many documentaries are performed having a budget of $ten thousand-50,000, which may be easily recouped 5 to 20 times over with DVD, TV, and foreign sales.
5. Are there any legal or regulatory restrictions preventing individual investors to sign up in film investment opportunities?
Generally, if you’ve got the money to invest, the filmmakers will find a technique to legally to give them the amount of money. Various vehicles include nonprofit corporations, LLCs, private placement memorandums, and loans. A normal requirement is the fact that individual hold the funds to invest funds that could be lost in a risky venture and is advised of the chance of the investment.
6. Exactly what are the key risks behind film investments and how do you prevent them? The real key risks behind film investments is definitely the possibility to lose all of it if the film doesn’t get completed or doesn’t find distribution. The easiest method to protect yourself is always to assess the chance of the feature film or documentary going in; assess whether the budget and expected return seems to be reasonable for the project; and assess if the producer, director, yet others on the film seem to have the experience to accomplish and market the film
7. Just how much would be the initial investment required to invest in a film production? A primary investment can vary coming from a few thousand to many hundred thousand, depending on the film and exactly how a smart investment swosox structured. For example, some indy filmmakers doing low budget films have discovered creative techniques for getting funds by inviting investments of $1000-2000 from those participating in the film, such as the actors and crew members. Others have divided up investment packages into $5000 each for 25 investors to raise $100,000. And others have looked for a few big investors, who can contribute at the very least $20,000, $50,000, $100,000 or more.
Then is a few investment in position, there can be other types of funds, like GAP funding and incentives from states and cities as rebates after filming is completed. VC funds will also be a chance, particularly after there exists some initial investment within the film, when the film’s budget will be at the very least $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?