Investment in movie production.
The very nature of the term investments suggests that one is committing capital to a project for the longer rather than short term. Furthermore, it is equally important to be aware that any investment carries risk, which in the worse case scenario could result in the total loss of ones money. Both of these conditions would apply to investing in movie production and, for these reasons, it is critical to analyse the project and its potential in detail. It has to be remembered that, for every movie that achieves success and profitability at the box office and through DVD sales, there are hundreds of others that will fail to cover their original costs, let alone return the capital to their investors, therefore the element of risk in this sector is extremely high.
The first step in the project analysis must be to research the skills and competencies of the people who are involved with the movie. For example, you need to ascertain what experience the director, movie crew and actors have within the industry. A director who has had some previous successes with movie making will be more likely to produce a movie that provides a return on investment than one who is relatively new to the business or who has a number of failures on his/her record. Similarly, actors who have starred in successful movies might have built up some element of a fan base, which unknown actors have yet to achieve. Therefore, the risk element of your investment increases dependent upon the standing of these people within the industry. However, a mix of successful/unknown director or actor will lessen that risk. The disadvantage of this latter scenario of course is that the level of investment will be higher as successful people cost more.
The next aspect that needs to be considered is the script and the genre it is aimed at. If it is an action/thriller or Science Fiction screenplay it is likely to attract a larger audience than perhaps a more serious romance or historical film. Ultimately, the return of an investment in movie production is reliant upon the size of its target audience and the ability of the filmmakers and distributors to attract sufficient sales to that audience. If the screenplay is aimed at a smaller audience sector, this result will be more difficult to achieve. Moreover, the quality of the original screenplay needs to be of the highest standard. If it is weak this will be seized upon by the media reviewers and the extent to which they dislike the film will lessen its chances of success. If you, as the investor, do not have the experience to be able to evaluate the strength of a screenplay it is important to find someone who can provide you with an expert opinion on this before committing to the investment.
Finally, there is a need to examine the administation, distribution and marketing programme that has been put in place for the film, both during the course of its making and its promotion upon release. In this respect, and from a financial aspect, it is important to be assured that there is a robust process of financial control to ensure that the final film project is produced within the prescibed timescale and within the budget provided. Equally, it is essential to ensure that the distribution and promotional process will ensure that the film is circulated for showing at the best cinema chains and locations and the target audience has been made aware of its release and delivered a message that will encourage sufficient numbers to purchase tickets to view the film.
Any investment attracts a risk and, in many respects, perhaps investment in movie production carries a higher level of risk than most opportunities. It follows that the analysis and research required before committing capital to such a project needs to be extensive and comprehensive. Although movie production might be an exciting and glamourous sector of the entertainment industry to be involved with, from the investors viewpoint it is still a matter of receiving an adequate return on the capital invested and, equally important, securing the return of that capital and growth upon the completion of the project.