Are films a good investment opportunity? I think these are for the best type of investor. Here’s why. I have written this in a Q&A style to answer the main questions that prospective investors ask about whether or not to invest or otherwise.
1. The reason why film investment a stylish investment opportunity? Is it as a result of high return or due to the nature of business? For a lot of investors, the high return is a big draw, because films do have the potential for a large return, though there is a very high risk with a lot of big “Ifs”. A film can perform extremely well if it possesses a good script, good acting, good production value, includes a budget that fits the type of film this is, and strikes a chord with distributors or buyers for the TV, DVD, foreign rights, or some other markets. Then, when the film enters into theatrical release, it provides the possible to get an even larger audience, though theatrical is not the key source of income for most films, merely the big blockbusters, considering that the theater owners take about 75% in the box office unless a film goes into a long-term release and you will find a high costs for prints (though an increasing number of theaters will be going digital). The price of a theatrical release is a lot more for the promotional value for gaining other kinds of sales, with the exception of the large blockbusters.
Despite the potential for high returns for many films, wikimedia in it for the money must realize that any film investment is a huge risk, because many problems can produce from the time a film goes into production to when it is finally released and distributed. Theses risks range from the film not completed as it goes over budget and is not able to get additional financing or you can find problems on the set. Another risk is the fact that film is not well-received by distributors and television buyers, so that it doesn’t get picked up. Or even in case a film receives a distribution deal, the chance is that there is little or no money in advance, so the film does not see further returns. So yes – a film may have a high return, but a venture capitalist can lose it all.
Because of this, for most investors, other key reasons behind investing are more important. They feel in the message of the film. They love and keep the film producers, cast, and crew. They like the glamour to be involved with a film, including meeting the heavens and likely to film festivals. They see their investment as a chance to go to distant locations for filming and for promoting the film. And they also see making an investment in the film as being a tax write-off, just like giving to some charity.
2. What sort of investment returns can investors should expect, since many independent productions are not intended for big screens, where are the sales originating from? If all of the stars align, and there is 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 very happy. A small-budget indy scenario for this particular amount of return may well be a film shot for $50,000-200,000. It could 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 many films, the main worth of a theatrical release is definitely the PR worth of getting the film known, so buyers would want to purchase or rent the DVD and TV buyers may wish to show it on one of many premium cable movie channels. Also, most films don’t get a theatrical release, and the funds are earned through other channels.
3. What kind of movies normally can generate good profits, since the recent Oscar Awards show that a big investment fails to necessary mean big returns? Some of the big blockbusters that pass the $100 million threshold can easily make a make money from a successful theatrical release, both in 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 can be typical within these films along with other high cost items, including special effects, many blockbusters still may 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 is more likelihood that a low-budget indy, which can be done well at a reasonable budget, is going to be sold and make back it’s money, and the chance of loss is far less.
4. Are documentaries a good 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 could be done with a significantly smaller crew – even several individuals the area – one for the camera, someone to handle sound and lighting, and the other to coordinate arrangements and ask good questions in the field. Post-production could be easier too, with fewer takes and less film to edit for your final cut. Many documentaries are done using a budget of $ten thousand-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 participate in film investment opportunities?
Generally, if you’ve got the amount of money to invest, the filmmakers will discover a way to legally to give them the money. Various vehicles include nonprofit corporations, LLCs, private placement memorandums, and loans. A typical requirement is that the individual hold the funds to shell out funds that could be lost in a risky venture and is also advised of the potential risk of the investment.
6. Do you know the key risks behind film investments and how do you prevent them? The real key risks behind film investments is definitely the possible ways to lose everything when the film doesn’t get completed or doesn’t find distribution. The best way to protect yourself is to assess the chance of the feature film or documentary going in; assess whether or not the budget and expected return seems to be reasonable for that project; and assess whether or not the producer, director, and others on the film have the event to complete and market the film
7. Exactly how much will be the initial investment required to invest in a film production? A primary investment can vary from a few thousand to several hundred thousand, depending on the film and the way a good investment swosox structured. As an example, some indy filmmakers doing low budget films are finding creative ways to get funds by inviting investments of $1000-2000 from those engaging in the film, such as the actors and crew members. Others have divided up investment packages into $5000 each for 20 investors to boost $100,000. And others have looked for a few big investors, who are able to contribute at least $20,000, $50,000, $100,000 or more.
Then is some investment in position, there may be other types of funds, such as GAP funding and incentives from states and cities as rebates after filming is finished. VC funds can also be plausible, particularly after there exists some initial investment inside the film, in the event the film’s budget is going to be a minimum of $1-2 million.
8. With modern technology advancements, exactly what are the opportunities for independent and emerging film producers; or are these developments much more of a threat as a result of piracy and competition?