The Box Office Brokers
The Box Office Brokers
A recent report in Slated Magazine sums up the current healthy state of the industry: “In what has been billed as a ‘new golden era of film finance’, high net worth individuals and institutions alike have been suddenly magnetised by a compelling macro picture that is rippling across the planet: accelerating global demand for content, even more distribution platforms competing for those titles. “Geographical expansion at the box office is only part of the picture. New technologies continue to carve open new outlets for viewing both at home and on the move, increasing the potential revenue- generating life of every title that achieves commercial distribution. “The video streaming capabilities of web- enabled televisions, iPads, Play Stations, X boxes and the like, mean that films are reaching more people than ever before. PWC predicts that both box office and video streaming revenue will each continue to grow over the coming years.”
For a record, there are not particular factors that could determine whether the film would hit the box office. However, in the past, many would consider genre, the credibility of the director, budget, the lead actors and the type of contract may influence the success rate. Insofar, I could not say whether there is a set of valuation model that could help in finding the potential winner. The truth is, usually, those factors are applicable to films produced by major studios. Independent films are rather more difficult to single out or even to establish the potential success rate. For example, a low-budget film like ‘ My Big Fat Greek Wedding’ was produced for $5 million has gross return worldwide of $369 million. Of course, exceptionally, the film wrecks the valuation model. Similarly, ‘The Blair Witch Project’ and ‘ +Paranormal Activity ‘ which cost $300,000 and $15,000 respectively, gave a phenomenal $141 million and $191 million. Do the math.
Investing through dedicated mutual funds offer a good medium to minimize risk participating in the film project. Mutual funds draw the investment from various sources and professionally managed in which normally would spread across a range of companies at different level of investment. Essentially, diversification in segmenting investment minimize the potential downside risk as well as the upside of returns. ‘Pre-sales’ of films, so that revenues are assured, before a film is made The development of films and content for specific audiences, where there is proven demand Working with experienced and trusted people, who know what the market wants Creating funds that include several projects, rather than one-offs Availability of independent reviews of film funds.
Undoubtedly, tax incentives for films industry are quite appealing. In the States, investors can utilise the tax credits provided at the state, federal and international level. Definitely, it is an efficient tool to upset risk. The tax relief, for instance, of British films with a total core expenditure of £20 million or less, the film production company can claim payable cash rebate of up to 25% of UK qualifying film production expenditure. Check UK Film Council for more details. In Malaysia, government provide incentives for film industry in term of pioneer status and investment tax allowance. The latter provide allowance up to 60% on the additional qualifying capital expenditure. The allowance can be offset against 70% of the statutory income. What is more, government introduced a production incentive that will cover up to 30% of TV program and feature film budgets.
Many Oscar nominations are now for independent films. Their quality is being recognised and is in demand. The major studios are largely only interested in ‘blockbuster’ films, so the growing demand for content has to be met from elsewhere. Film funds that can select quality and targeted content are now the natural place to meet this growing demand for content.
Ok this one is just attractive if you are a POP-CORN supplier, but it puts in perspective all the possibilities to make more money through PRODUCT PLACEMENT Most movie production companies do not rely solely on ticket sales for revenue generation. Instead, they seek multiple income streams from a single film. This includes merchandising, branding partnerships, and in film advertising and branding. For example, a film might earn 45 million dollars in ticket sales. If the filmmakers have also made an in-film advertising deal with a major brand, they could possibly earn another 25 percent of that over and above ticket revenues. Of course, the specifics of each deal will vary. Film producers can find new funding opportunities by allowing companies to use product placement and other branding methods in the films they are making
Films are glamorous. They have an aura about them. This is perhaps because most of us are not actors or film stars, and can only dream of being taking part in the making of a film.. But investing in film with Iron Box means that you can genuinely get involved. You will be offered opportunities to watch filming taking place and meet the cast. There may be opportunities to be an ‘extra’ in some of the films. And, of course you will be invited to the film premieres. We want you to enjoy the experience of investing in films.