Are films a great investment opportunity? I do believe they are for the best sort of investor. Here’s why. I have written this in a Q&A style to answer the key questions that prospective investors ask about if you should invest or otherwise.
1. Exactly why is film investment a beautiful investment opportunity? Will it be because of the high return or because of the nature of economic? For many investors, the high return is a huge draw, because films do have the possibility for a very large return, though there exists a very high risk with many different big “Ifs”. A film can perform very well if it features a good script, good acting, good production value, includes a budget that suits 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, if the film is put into theatrical release, it provides the potential with an even larger audience, though theatrical will not be the key revenue stream for most films, merely 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 exists a high costs for prints (though a lot more theaters are getting digital). The price of a theatrical release is more because of its promotional value for gaining other sorts of sales, except for the massive blockbusters.
Despite the potential for high returns for a few films, kjammedia within it for the money need to understand that any film investment is a huge risk, because many problems can develop from the time a film goes into production to after it is finally released and distributed. Theses risks range from the film not being completed since it goes over budget and struggles to get additional financing or you can find problems on the set. Another risk is the fact that film will not be well-received by distributors and TV buyers, so it doesn’t get picked up. As well as when a film gets a distribution deal, the danger is the fact that there is little or no money at the start, therefore the film will not see further returns. So yes – a film may have a high return, but an investor can lose everything.
Because of this, for most investors, other key reasons for investing are more important. They think inside the message of the film. They love and secure the film producers, cast, and crew. They like the glamour for being associated with a film, including meeting the stars and going to film festivals. They see their investment as an opportunity to visit distant locations for filming as well as for promoting the film. Plus they see making an investment in the film as a tax write-off, just like giving to a charity.
2. What sort of investment returns can investors can expect, since several independent productions are not intended for big screens, where are definitely the sales provided by? If each of the stars align, and there exists a good film completed with a fair budget and distributors, buyers, as well as an audience responds, the film could readily earn 4 to ten times its cost, making everyone delighted. A low-budget indy scenario for this particular degree of return can be quite a film shot for $50,000-200,000. It might get $500,000-750,000 to get a TV sale and earn $1-2 million more through DVD, streaming, and foreign rights sales, even without having a theatrical release.
For most films, the key worth of a theatrical release is definitely the PR value of having the film known, so buyers will want to purchase or rent the DVD and television buyers would want to show it on among the premium cable movie channels. Also, most films don’t obtain a theatrical release, and also the funds are earned through other channels.
3. What type of movies usually can generate good profits, because the recent Oscar Awards show that a large investment does not necessary mean big returns? A number of the big blockbusters that pass the $100 million threshold can certainly produce a profit from an excellent theatrical release, in both the U.S. and abroad. But whether or not they produce a profit is dependent upon their budget. Due to the high salaries of stars which can be typical during these films along with other high cost items, such as effects, many blockbusters still might not create a profit. Thus, dollar for dollar, many low-budget indy films can be a better investment, because the multiples are higher using a success; there exists more likelihood that a low-budget indy, which is done well with a reasonable budget, will likely be sold making back it’s money, and the opportunity of loss is much less.
4. Are documentaries a great investment opportunity? Good documentaries are an especially good investment opportunity, since the costs of creating documentaries tend to be less than for feature films. They can be finished with a significantly smaller crew – even 2 or 3 people in the area – one for your camera, someone to handle sound and lighting, and another to coordinate arrangements and inquire good questions within the field. Post-production can be easier too, with fewer takes and much less film to edit for that final cut. Many documentaries are carried out with a budget of $10,000-50,000, which could be recouped 5 to 20 times over with DVD, TV, and foreign sales.
5. Are there legal or regulatory restrictions preventing individual investors to sign up in film investment opportunities?
Generally, if you’ve got the money to shell out, the filmmakers will find a way to legally to give them the cash. Various vehicles include nonprofit corporations, LLCs, private placement memorandums, and loans. An average requirement would be that the individual hold the funds to spend 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 will you prevent them? The key risks behind film investments is the possibility to lose everything if the film doesn’t get completed or doesn’t find distribution. The easiest method to protect yourself would be to assess the potential for the feature film or documentary going in; assess if the budget and expected return appears to be reasonable for that project; and assess whether or not the producer, director, as well as others on the film appear to have the knowledge to finish and market the film
7. How much will be the initial investment required to invest in a film production? An initial investment may range from the few thousand to a few hundred thousand, depending on the film and how a good investment swosox structured. As an example, some indy filmmakers doing low budget films have found creative ways to get funds by inviting investments of $1000-2000 from those taking part in the film, including the actors and crew members. Others have divided up investment packages into $5000 each for 20 investors to increase $100,000. Still others have looked for a couple of big investors, that can contribute a minimum of $20,000, $50,000, $100,000 or even more.
Then is a few investment in place, there can be other types of funds, like GAP funding and incentives from states and cities by means of rebates after filming is completed. VC funds can also be plausible, particularly after there is some initial investment inside the film, if the film’s budget is going to be at the very least $1-2 million.
8. With modern technology advancements, exactly what are the opportunities for independent and emerging film producers; or are these developments more of a threat because of piracy and competition?