SHOULD I INVEST?
There are usually two reasons why people invest in the film industry.
The first is diversification – established investors finding new, relatively low-risk ways to make their money work for them.
It might surprise people to learn that the entertainment industry may be a relatively low-risk form of investment, especially if that investment is in pre-production as a bridge or funds a tax incentive.
The second reason for investing is usually around people’s interests. If a person has an interest in the arts and film, especially if it is a special story they feel could be a great movie, they will enjoy investing their money in a way that could be very rewarding personally and financially.
Also, investing in films as part of a wider suite of investment products is a great way to diversify a portfolio.
A great way to start is through networking with entertainment creators and production companies. Attending film festivals is an excellent way to meet the right people.
HOW WILL THE INVESTMENT BE USED?
Funds are often needed at early stages of a production to actually get a production off the ground. So, an investment could form part of a bridge loan, which will then be repaid before the film is even made – making it a good short-term investment. Investors of this kind are repaid first, before a film is even shown, so again, the risks are more limited.
It is possible to see a 15 to 20 per cent return. Seasoned investors often do several movie investments a year and can have great results.
There may also be tax benefits to investors – depending on their specific situation.
WHAT DOES THE FUTURE LOOK LIKE?
Very promising! Entertainment distribution models are changing, bringing new and improved opportunities for investors.
The rise of subscription channels like Hulu and Netflix means there is more demand than ever for high-quality content; creating more need for producing content and investors.
At the same time, the ‘entertainment experience’ industry is expanding, leading to more need for external funding.
This article is provided for information and discussion purposes only, and it is not to be perceived as investment advice.