You’ve may not have been able to become the blockbuster actor you dreamed of as a child, but you still can break into the movie business – as an investor.
Text: Zoe Dillard
I f you’re a fan of Hollywood and are comfortable with high levels of risk, (high risk and high returns), then choosing to investment in the movie business may be for you. Investors enjoy the many perks of the film industry – red carpets, film festivals, meet and greets with actors, and tax breaks…. But let’s be honest, for most obvious reason to invest in film is the possible return, not necessarily because you like the red carpet. (Disclaimer: You are welcome to invest for whatever reason, I don’t judge. If you can, then do it!) When a film investment hits it big, it hits it really big. The option that the return is long-lasting exists with additional residuals from Blu-Ray sales, television airings, Video on demand subscriptions, pay-per-view, and merchandising. There is no correlation between film and the markets so if the Dow dips, film becomes an excellent alternative for diversification.
The private equity and hedge fund vehicles are one way to get into the movies. Red Rock Entertainment is an alternative. The company unites investors, film financing companies and filmmakers, helping them work together to complete projects and maximize profits. Another substitute is it to simply call your broker and invest in some solid firms as well as some of the newcomers to the movie production business such as Netflix (NFLX), Wonderfilm Media Corporation (WDRFF), ComCast Corporation (CMCSA), AMC Entertainment Holdings (AMC), and Twenty-First Century Fox (FOXA). It would be wise to first understand where in the chain of production these companies play a role in order to maximize your ROI.
As with many other investment opportunities, sometimes the high risk equates to high returns and sometimes it doesn’t. You can reduce your risk by only working with experienced investment companies that have several hits under their belts and can produce a decent track record. Keep an eye out for trends in the film industry. The Toy Story franchise is a good example of a film production that disrupted the animation side of the industry, opening the door for similar successful projects. Consider beginning with Independent films that have lower budgets. In 2017, the indie movie Get Out benefitted from a monstrous 630% return.
Keep in mind, there are many ways to make money by investing in this industry. The benefits can stretch far beyond the box-office with merchandising sales, streaming, DVD, and TV rights – and not to mention the “clout.” Will I see you on the red carpet at next year’s Cannes Film Festival?