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.

Visit Mumbai – Booming Bollywood, the World’s Largest Film Industry!

Mumbai is one of the most happening and glamorous cities in India. It is the commercial and economic powerhouse of the country. Mumbai is bestowed with a number of tourist’s attractions, and receives a great flux of tourists every year. Mumbai is a unique city of India, which is always on move and never sleeps. A large volume of European visitors get into city by taking flights to Mumbai India. It has historical monuments, beautiful beaches, and many other attractive places to visit. These tourists places provide you an insight into the otherwise hidden legacy of the place. As Mumbai is a lively city the city tour will refresh you from all aspects. Mumbai is one of the world’s most famous cities and the main reason behind its fame is Bollywood. Mumbai is home to Indian film industry. A number of film and film star fans take Mumbai India flights to meet film stars and watch shootings.

Being the main hub for Indian film Industry Mumbai has played a pivotal role in the development of cinematography. The city has remained a main centre of Indian Film Industry for a period of a century. Shooting for a number of film cities is done in this film city, and if you are lucky you can even get a chance to meet and see bollywood stars after taking cheap flights to Mumbai from UK by making your flights reservation with some authentic travel operator like flights to Mumbai India The film city is located away from city life at Goregaon. The Film City is not open to admission without a prior permission however you can visit the sets of various bollywood films by getting prior permission and can find multiple places of your interest after taking cheap Mumbai India flights.

The Bollywood Film City was established in the year 1911. Today, the Film city boasts of all modern technology that can produce movies of great visuals and quality. It has now become the hot spot to find Bollywood top stars. Among visitors taking cheap flights to Mumbai the city is titled as the ‘Dream City’. It is a small world in itself featuring fountains, gardens, lakes, fighting grounds, helipads and real-looking buildings. Reaching Film City is very easy as both air ports of the city; Chhatrapati Shivaji International airport and Santa Cruz Airport are quite near to Film City. You can take flights to Mumbai India from UK with to reach Mumbai international Airport.

Top Tips for Getting Started in the Film Industry

BECOMING a movie maker has never been easier since the invention of digital technology. As there are no ‘official’ movie making courses as such, getting started can often be confusing for the newbie. But like most things, if you know where to look, you can be up and running pretty quick with the basics.

Film making doesn’t require a ‘DEGREE’ as such, and is more a trial and error industry where you learn on the job.

1) WATCH MOVIES

The best way to get started is to actually watch lots and lots of different movies. Buy DVDS, go to the cinema, and rent them. However, you need to be paying more attention to the filming of a scene rather than the characters, and the plot, although, all three of these are entwined in the movie making process.As Academy Award Winner Martin Scorsese said in one of his autobiographies, he didn’t go to film school, he just went to the movies.

2) BUY BASIC FILM COURSES ONLINE

If you are just interested in the basic the best way to get started in the industry is to buy a basic set of courses that are available online. These are not expensive, and are a good grounding to get started. These courses will often show you what type of equipment you will need as an independent movie maker. But with the invention of digital technology, you will be able to get started on a shoe-string budget.

3) FILM SCHOOLS ONLINE/OFFLINE

IF you are looking to get ‘hands on’ with making movies, then film school is an option, but they can be expensive, and sometimes, forking out hundreds is not always the best option. Many of the best movie makers actually started their careers with little or no ‘certified’ training, as was said by all the great directors, making movies is about creativity, knowing what techniques will work best through watching as many movies as you can. There are a couple of good film schools online, that don’t break the bank.

Deciding where to get started is a minefield, but it is just a question of finding a method that is right for you.