The Appeal of Investing in Films

Are films a good investment opportunity? I think they are for the right kind of investor. Here’s why. I have written this in a Q&A style to answer the major questions that prospective investors ask about whether to invest or not.

1. Why is film investment an attractive investment opportunity? Is it because of the high return or because of the nature of business?

For many investors, the high return is a big draw, because films do have the potential for a very large return, though there is a very high risk with a lot of big “Ifs”. A film can do extremely well if it has a good script, good acting, good production value, has 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 other markets. Then, if the film goes into theatrical release, it has the potential to have an even larger audience, though theatrical is not the primary source of income for most films, just the big blockbusters, since the theater owners take about 75% of the box office unless a film goes into a long-term release and there is a high costs for prints (though an increasing number of theaters are going digital). The value of a theatrical release is more for its promotional value for gaining other kinds of sales, except for the huge blockbusters.

Despite the potential for high returns for some films, investors in it for the money have to realize that any film investment is a big risk, because many problems can develop from when a film goes into production to when 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 there are problems on the set. Another risk is that the film is not well-received by distributors and TV buyers, so it doesn’t get picked up. Or even if a film gets a distribution deal, the risk is that there is little or no money up front, so the film does not see any 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 are more important. They believe in the message of the film. They like and support the film producers, cast, and crew. They like the glamour of being involved with a film, including meeting the stars and going to film festivals. They see their investment as an opportunity to travel to distant locations for filming and for promoting the film. And they see investing in the film as a tax write-off, much like giving to a charity.

2. What kind of investment returns can investors can expect, since many independent productions are not designed for big screens, where are the sales coming from?

If all the stars align, and there is a good film done with a reasonable budget and distributors, buyers, and an audience responds, the film could readily earn 4 to 10 times its cost, making everyone very happy. A low-budget indy scenario for this level of return might be a film shot for $50,000-200,000. It might get $500,000-750,000 for a TV sale and earn $1-2 million more through DVD, streaming, and foreign rights sales, even without a theatrical release.

For most films, the main value of a theatrical release is the PR value of getting the film known, so buyers will want to purchase or rent the DVD and TV buyers will want to show it on one of the 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 can usually generate good profits, since the recent Oscar Awards show that a big investment does not necessary mean big returns?

Some of the big blockbusters that pass the $100 million threshold can certainly make a profit from a successful theatrical release, both in the U.S. and abroad. But whether they make a profit depends on their budget. Because of the high salaries of stars that are typical in these films and other high cost items, such as special effects, many blockbusters still may not make a profit. Thus, dollar for dollar, many low-budget indy films may be a better investment, since the multiples are higher with a success; there is more likelihood that a low-budget indy, which is done well at a reasonable budget, will be sold and make back it’s money, and the potential for loss is much less.

4. Are documentaries a good investment opportunity?

Good documentaries are an especially good investment opportunity, since the costs of making documentaries are much lower than for feature films. They can be done with a much smaller crew – even two or three people in the field – one for the camera, one to handle sound and lighting, and another to coordinate arrangements and ask good questions in the field. Post-production can be easier too, with fewer takes and less film to edit for the final cut. Many documentaries are done with 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 any 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 find a way for you 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 have the funds to invest funds that might be lost in a risky venture and is advised of the risk of the investment.

6. What are the key risks behind film investments and how do you prevent them?

The key risks behind film investments is the potential to lose it all if the film doesn’t get completed or doesn’t find distribution. The best way to protect yourself is to assess the potential of the feature film or documentary going in; assess whether the budget and expected return seems to be reasonable for the project; and assess whether the producer, director, and others on the film seem to have the experience to complete and market the film

7. How much will be the initial investment required to invest in a film production?

An initial investment can range from a few thousand to several hundred thousand, depending on the film and the way an investment is structured. For example, some indy filmmakers doing low budget films have found creative ways to get 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 20 investors to raise $100,000. Still others have looked for a few big investors, who can contribute at least $20,000, $50,000, $100,000 or more.

Once there is some investment in place, there can be other sources of funds, such as GAP funding and incentives from states and cities in the form of rebates after filming is completed. VC funds are also a possibility, particularly after there is some initial investment in the film, if the film’s budget will be at 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?

There is a growing opportunity today for indy and emerging film producers to get distribution in alternate ways, such as through the Internet, self-distributed streaming downloads or DVD sales, play on mobile devices, and sales of DVDs or streaming rights to Netflix and Blockbuster. While piracy has always been a concern, new technological fixes can help to prevent this, such as locks to prevent duplication or more than one or two showings of the film. Other protections can come through licensing a film for distribution to platforms like iPhones, which have their own protections against copying.

Certainly, there is more and more competition, because more and more people can make films today, though the big studios and distributors still dominate in the theatrical arena and they have the money to make the big films with big stars and special effects. But the new technologies for production and distribution offer so many more avenues to create and market indy films at a much lower costs. So there are naturally many more films out there from many thousands of producers.

But with creative promotion, filmmakers can help their film stand out among the clutter. They can creatively use the social media, such as LinkedIn, Facebook, and Twitter to let people know about their film. They can gain recognition on the film festival circuit. They can get endorsements from well-known people. They can mount an e-mail PR campaign to the media. They can rent theaters to set up showings in different cities. They can put on events with their film as a centerpiece. And they can make themselves available to appear on radio and TV shows, as well as for interviews with reporters for the print media. In turn, all of these activities can help to sell their film to distributors and buyers for TV, DVD, foreign, and other sales, while attracting a growing audience for the film, making distributors and buyers even more eager to promote the film.

So, yes, indy films can be a great investment for certain films. And whether you make money or not, an investment can open u p many opportunities for more involvement in the film industry and for having fun.

Copyright © Gini Graham Scott 2010. This article can be shared with others personally if the whole article is included, along with the bio at the end of the article. Please contact the author directly for republication rights.

Feel the Richness of LED Lights Illumination in Video and Film Industry

Photography and video production is all using the energy-efficient lights. To give the long-lasting impression to film and entertainment industry LEDs form the best source of lighting. It helps the professionals to explore the brighter and innovative techniques of the arena.

As you know light emitting diodes are the energy-saving lamps working more reliably than traditional fluorescent or incandescent lighting system. When used in entertainment sector for photography or video production, it tend to offer a constant stream of non-flickering illumination that brighten the atmosphere with colourful aura of red, blue, green and yellow bulbs.

The LED panels for videography serve an ideal way to brighten a shot with perfect glowing and illuminating services to the dull, colourless and dim area. It offers important dimension to any shot that needs right glowing and perfection for its working. A novice video maker recommends the use of LED lights for every personal and specialized shoots.

Facts about LEDs in TV and entertainment sector

According to NAHB Research Centre, “Many professionals in the TV and entertainment sector play safe to use it as the GEN Next lighting source for several video displays and flat panel TVs. The first television channel that experienced the innovative technology of LED display was Sony Entertainment Pvt. Ltd. After this every TV channel make a shift over to this energy-efficient technique to serve the audience with highly clarity picture, sound and brightness moves to audio, video and photography sector.

It has been further revealed that installing these in the television studios, theatre, film studios, auditoriums, and other stage and art venues results in saving the 75% of electricity bill. It tries to cut the electric consumption wasted on glowing halogen bulbs. The inevitable uses of LED in Hollywood to shoot at different locations for English movies are inexpressible. The long hour shoot for daily soaps make it an affordable means to lighten and brighten the set at an affordable means.

As a result many European and British channels has made these lights as the perfect source of illumination to give its staff a good and comfortable working environment. These lighting diodes need less energy but produce more power per watt than traditional lamps such as halogens and fluorescent bulbs. It works as eco-friendly lighting source for the users. The most widely used product that supports the Film and Entertainment industry is LED panels. Every photographer and videographer makes use of this innovative resource to brighten different studio or production area. Thus, it becomes the right investment to the power industry to gain innumerable benefits at affordable pricing.

‘That’s Entertainment’: Making Meaning in Films

The cinema has become, perhaps after television, the most popular form of visual entertainment in the modern world. Every night, millions of people sit down to watch either a film on TV, a film on video, or else a film on the silver screen, at the cinema.

Cinemagoers walk away from film theatres satisfied with what they have seen, or disappointed, with some taking a sort of neutral view of the film’s quality. All, however, have been in communication with the messages put forward by the film.

Unlike printed text, which uses the word, or music, which utilizes sound, the medium of film uses several different ‘tracks’ to reach its audience. These are image, music, dialogue, noise, and written material.

These five are mixed by the film’s producers to form a ‘language’, though this is not the language of the word, the sentence or the text, but the language of the sign. All five are projected out to the audience, and each of the five constitutes a sign, a signifier, for something else. The language of film is the language of semiotics, the language of the sign.

The term ‘signifier’ is used to denote the physical form of the sign. In a film, this could be a smile, a red traffic signal, dramatic music, a shout, or the words of a letter someone is reading. Each signifies something, represents something else.

A smile might signify happiness, joy or love, but it might also signify a triumph of some sort for the person smiling. Everyone knows that a red traffic light means ‘STOP’.

Dramatic music could mean that something important is about to happen. A shout usually signifies danger or pain of some sort, but that might depend on the context in which the shout is heard. Finally, the words of a letter someone is reading on screen use the semantics of language, English, French, or Arabic, for example, in ways that we are familiar with. The word ‘dog’, for example, in the English language, represents the canine species so familiar to pet lovers, and that despite the fact that there is absolutely nothing ‘dog-like’ in the letters of the word D-O-G. The word is also a signifier.

These examples of signifiers and the things they signify, the signified, using real items, the referents, point to several important features of the language of the sign. For the signifiers to represent something to on an audience, they must be sufficiently universal to be fully and quickly understood by everyone watching. A green light that stops the traffic would puzzle everyone.

However, it is worth noting that film makers can use these ‘universals’ to some effect. If a person who has just lost a race smiles into the camera rather than frowns, the audience may be alerted to the fact that something out of the ordinary is happening; that the person intended losing the race, for a reason that might become apparent later in the film. In a letter, the word ‘DOG’ might turn out to be code for ‘SPY’, for example, and this points to yet another facet of the sign, that the context in which it appears helps determines its meaning.

A shout heard at a local football match might mean only that a goal has been scored, in a battle, that someone has been mortally injured. Within different contexts, however, a universality must apply. If it does not, that particular use of the signifier would appear either inappropriate, or misleading.

Finding meaning from apparently meaningless events is a very human trait, and the effect discovered by Lev Kuleshov in the 1920s in the former Soviet Union, and after whom it is named, is that two shots shown in quick succession in a film, one after the other, are not interpreted separately in the viewer’s mind. They are interpreted as being causally related. A + B = C, in which A and B are the two shots, and C is a new value that is not originally included in the two shots.

So, for example, if the first shot is of one showing bombs dropping from a plane, and the second shows a village in flames, the audience will assume that the bombs hit the village and destroyed it.

This accords with that peculiar characteristic of humans; their quest for meaning in otherwise meaningless items. This has its equivalent in language too. Two sentences that appear one after the other will invariably be treated as being causally connected, even though there may be nothing to suggest that.
A: The bombs fell from the plane.
B: The village was completely destroyed..
C: It would be assumed here that the village was destroyed by the same bombs that dropped from the plane. What works on film sometimes works with language too.

In today’s films, this is used to great effect, and is reminiscent of film director, Alfred Hitchcock’s advice to would be film-makers; “Don’t tell, show.” This seems to suggest that the five ‘tracks’ of film language are more powerful when used together than merely the spoken word on film. Even Shakespeare commented that, ‘the eye is more learned than the ear,’ suggesting that we do indeed learn more from being shown than being told.

In the well known series of James Bond films, for instance, the utter ruthlessness of the villain, be he a megalomaniac or a drugs baron, is depicted not so much by words about him, but rather by scenes showing an unsuspecting former confidant of his coming to a grizzly end in a tank full of piranhas or something equally distasteful and spectacular.

That he is devious in the extreme is shown in the early sequences by the friendly and urbane hospitality he shows to the hero of the hour -007.

The scenes in which he shows his true colours, come as no surprise to an audience expecting some exotic, high-tech form of brutality from Bond’s adversary.

Those of us who have seen all those films know exactly what to expect and are never disappointed. In a sense, the ‘language’ of the film extends a communication to us over several films, and to that extent, James Bond films may be said to be formulaic and predictable. Giving the public what they want, however, works at the box office; sequels sell.

In terms of what the audience bring to the film-theatre, I suppose by far the most important is expectation, the anticipation that what they are about to see on film is the same as what they expect. Trailers, adverts and the almost innate knowledge of the modern cinemagoer regarding the stars as well as the producers coalesce to ensure that all the industry’s blockbusters make money.

More unconsciously, audiences bring what has been called the ‘willing suspension of disbelief’ to the performance and while this is more in evidence and more necessary for audiences watching live performances on stage, it is still a vital part of an audience’s participation in the cinema. Some film theorists point to the fact that a three-dimensional image, with depth and field, is projected onto a two-dimensional screen and yet still perceived as being three-dimensional, as evidence that an audience is willing to suspend some of their disbelief. The technology of the film industry giants is so extraordinary though as to render this statement quite meaningless.

In the film ‘The Lord of the Rings’ for example, the appearance of enormous mammoths in the midst of thousands of fearsome looking orcs does not really require much suspension of disbelief; everyone watching this wonderful film is well aware that such creatures do not exist anywhere on the planet. Where disbelief must be suspended initially is in entering Tolkien’s world of dragons, dwarfs and hobbits. The total universe of Middle Earth is more subtly projected. An inability to be fully engrossed in this world may interfere with any enjoyment gained from watching the film, or may prevent that person from seeing the film in the first place.

Art is not nature, art holds a mirror up to nature, or so we are told, but it is the holding and in the choosing what part of nature is mirrored that makes film so fascinating and meaningful. The people watching the film in the splendid isolation of the darkened cinema enjoy a form of entertainment in which this one-way communication operates, only bringing to the scene what they can: their participation in the culture in which they dwell, and their wish to know that they are not alone in this world.

It is this identification with the characters in the film that hinders their critical appraisal of it. Bertolt Brecht knew it and took steps to avoid it, but Hollywood revels in it. More identification with the leading character/s sells more tickets. Leave the critical theorizing to Media-studies courses at university. ‘Not a dry eye in the house’ is what every successful film director aims for.

Suspense, letting the audience know something that the person on screen does not know, is one of the many devices used by skillful directors. The screams heard when the woman is stabbed in the shower in the Hitchcock classic; ‘Psycho’ were probably nothing to do with the amount of pain being inflicted by the knife. Audiences cannot really imagine that. The screams were caused by the shock of the situation; the extreme levels of identification with the victim, the feeling of the powerlessness of either the victim on-screen, or the audience off, unable to stop the attack.
Why then do people go willingly to see a film they know, even hope, will terrify them?

They are experiencing something out of their total range of experience, and doing it in comfort too. They are alone, even in a packed cinema. Cinema is not a community event, it is an individualized one. In the cinema, the audience is held enthralled, in a way that is rarely possible watching the TV or a video on TV. The film on the big screen cannot be stopped. The drama unfolds with or without your presence, and few people leave in the middle of a film. That’s entertainment!