Are films a great investment opportunity? I do believe these are for the ideal sort of investor. Here’s why. We have written this in a Q&A style to respond to the major questions that prospective investors find out about whether to invest or otherwise.
1. The reason why film investment a beautiful investment opportunity? Will it be as a result of high return or due to the nature of business? For many investors, our prime return is a huge draw, because films do have the possibility for a very large return, though you will find a very high risk with many different big “Ifs”. A film can do very well if it has a good script, good acting, good production value, features a budget that suits the type of film this really is, and strikes a chord with distributors or buyers for that TV, DVD, foreign rights, or other markets. Then, when the film goes into theatrical release, it offers the possible to have an even larger audience, though theatrical is not really the primary revenue stream for most films, just the big blockbusters, because the theater owners take about 75% in the box office unless a film goes into an extended-term release and there exists 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, aside from the massive blockbusters.
Despite the chance of high returns for many films, kjammedia inside it for the investment have to recognize that any film investment is a huge risk, because many problems can develop from when a film is put into production to after it is finally released and distributed. Theses risks include the film not being completed because it goes over budget and is unable to get additional financing or you can find problems on the set. Another risk would be that the film will not be well-received by distributors and TV buyers, so it doesn’t get found. Or even when a film receives a distribution deal, the danger is the fact there is very little or no money at the start, so the film does not see any more returns. So yes – a film could have a high return, but an investor can lose all of it.
Consequently, for many investors, other key factors behind investing are definitely more important. They feel in the message in the film. They love and support the film producers, cast, and crew. They love the glamour of being associated with a film, including meeting the heavens and planning to film festivals. They see their investment as the opportunity to go to distant locations for filming and then for promoting the film. Plus they see making an investment in the film as being a tax write-off, much like giving to some charity.
2. What type of investment returns can investors can get, because so many independent productions usually are not intended for big screens, where are definitely the sales originating from? If all the stars align, and you will find a good film finished with a reasonable budget and distributors, buyers, plus an audience responds, the film could readily earn 4 to ten times its cost, making everyone delighted. A minimal-budget indy scenario with this degree of return can be quite a film shot for $50,000-200,000. It may 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 value of a theatrical release will be the PR worth of having the film known, so buyers may wish 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 get yourself a theatrical release, and also the funds are earned through other channels.
3. What sort of movies normally can generate good profits, considering that the recent Oscar Awards demonstrate that a big investment fails to necessary mean big returns? A number of the big blockbusters that pass the $100 million threshold can certainly produce a benefit from an excellent theatrical release, in both the U.S. and abroad. But whether they create a profit depends on their budget. Because of the high salaries of stars that are typical in these films as well as other high cost items, such as effects, many blockbusters still may well not make a profit. Thus, dollar for dollar, many low-budget indy films might be a better investment, because the multiples are higher using a success; there is certainly more likelihood which a low-budget indy, which is done well with a reasonable budget, is going to be sold and make 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, because the costs of producing documentaries tend to be less than for feature films. They could be finished with a significantly smaller crew – even 2 or 3 people in the sector – one for your camera, one to handle sound and lighting, and the other to coordinate arrangements and get good questions inside the field. Post-production can be easier too, with fewer takes and less film to edit for that final cut. Many documentaries are done 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. What are the legal or regulatory restrictions preventing individual investors to participate in film investment opportunities?
Generally, if you’ve got the money to invest, the filmmakers will discover a technique to legally to provide them the amount of money. Various vehicles include nonprofit corporations, LLCs, private placement memorandums, and loans. A typical requirement is the fact that individual possess the funds to shell out funds that could be lost in a risky venture and is also advised of the risk of your time and money.
6. Exactly what are the key risks behind film investments and how can you prevent them? The real key risks behind film investments is definitely the possible ways to lose all of it in the event the film doesn’t get completed or doesn’t find distribution. The simplest way to protect yourself is always to assess the potential of the feature film or documentary going in; assess whether the budget and expected return is apparently reasonable for that project; and assess whether or not the producer, director, yet others on the film appear to have the event to complete and market the film
7. Just how much will be the initial investment needed to invest in a film production? An initial investment may range coming from a few thousand to several hundred thousand, depending on the film and exactly how an investment swosox structured. For instance, some indy filmmakers doing low budget films are finding creative methods for getting funds by inviting investments of $1000-2000 from those participating in the film, like the actors and crew members. Others have divided up investment packages into $5000 each for 25 investors to raise $100,000. Still others have looked for a couple of big investors, that can contribute at least $20,000, $50,000, $100,000 or more.
Then is some investment in position, there might be other sources of funds, such as GAP funding and incentives from states and cities by means of rebates after filming is finished. VC funds will also be plausible, particularly after there is some initial investment inside the film, when the film’s budget will be at the very least $1-2 million.
8. With modern technology advancements, what are the opportunities for independent and emerging film producers; or are these developments more of a threat due to piracy and competition?