By Wade Bradley | Media Society
New community-based investment strategies beat the odds in Hollywood.
Investing in Hollywood has always been and will remain an emotionally charged activity that historical data clearly illustrates is a risky business. Unfortunately, its allure can dissuade normal investment logic and the advent of more powerful technology has likely increased investor risks, making it easier to produce more films that business logic does not favor.
No matter how developed the average film investor’s skills and abilities are in the public sector markets, they grapple with critical entertainment industry elements that are generally misunderstood or completely unseen. Often, the very last questions an investor contemplates after having made a film are the precise questions that were necessary to be asked and analyzed before ever starting the production process. These are the questions that drive the greenlight decisions; what is the audience-driven market genre and theatrical distribution plan?
With the right knowledge, accredited investors can avoid the riskier aspects of investing in Hollywood and play an active role in the entertainment industry as true insiders.
Truly knowing your exact audience is mostly overlooked when nascent producers and investors begin to delve into a potential film project as an investment. This is because the principals have already passionately attached themselves to an emotionally driven story that is meaningful to them personally. Instead, investors and producers should be analyzing the specific audience-driven market that a particular story can deliver to theaters. And, if the film beats the odds and achieves theatrical distribution after completion, what would the marketing plan entail?
Whatever level of experience you have in entertainment investments, focusing on highly underserved or insatiable appetite markets as a starting point is far more important to an entertainment investment than a compelling story. Why? Because one of the most important questions most investors and filmmakers rarely ask prior to committing hundreds of thousands or even millions of dollars is that when the product is complete (yes, this is a product), who will care?
The ‘who will care’ question about a particular film begins the probe into a deeper, more important question; who is the exact audience for the finished film, how are they best reached through marketing, how frequently must they see marketing, and at what cost? Ultimately, what is learned shines a light on what is an acceptable level of total funding for the production and its subsequent distribution, and whether the production should be embarked upon at all.
This is in addition to the most critical questions. What is the total cost of producing and theatrically releasing the film? Will these costs be recouped throughout the various distribution channels? Most importantly, what is the likelihood the completed film will achieve a substantial return on investment?
Right now you’re probably asking yourself if it’s worth all the trouble, so let’s look at the numbers associated with investments in Hollywood. Currently, of the estimated 10,000 films produced annually, only 450-600 achieve domestic theatrical distribution. Amazingly, they share in an annual box office take of more than $10 billion and a domestic home entertainment market of over $18 billion. This cannot be overstated, based on the estimates only 4%-6% of the films made annually compete for over $28 billion in domestic revenues. That is a huge market! The only caveat is that you must achieve domestic theatrical distribution.
Here’s an example of how to do that. Upstart Media Society has been in business since 2012. It works to provide its exclusive, members-only society of accredited individuals a smart money strategy to get in the game. The company is committed to a highly disciplined strategy that assures that each film will be produced by top-tier professional producers and will have the critically important distribution capital on-hand to ensure a domestic theatrical release. Having a domestic theatrical release subsequently opens the entirety of the home entertainment marketplace. The company strives for a rigorous end-to-end managed risk-investment strategy that provides a previously unavailable foundation for investors to participate in a diversified slate of world-class feature films with the potential to earn a high return on investment.
Members also enjoy attending exclusive events and film sets while using a smart-money strategy as executive producers of major motion pictures that are seen globally. This is one of the reasons Forbes named Media Society one of the 15 “Unknown All Stars of Finance” in their 2015 Investment Guide.
The company is focused on delivering what any investor should look for – a disciplined strategy and substantial risk mitigated return-on-investment potential that is especially notable when compared with other alternative investment asset classes.
For example, a disciplined industry strategy is one that partners top-tier producers with successful track records and making great quality movies with prosperous high-net-worth members who come from all walks of life. In the case of Media Society, the success of this proven strategy is best illustrated with the upcoming October 2015 release of Big Stone Gap, produced by Oscar winner Donna Gigliotti (“Shakespeare in Love” and “Silver Linings Playbook”) and written and directed by Adriana Trigiani (“The Shoemakers Wife”). “Big Stone Gap” stars Ashley Judd, Whoopi Goldberg, Jenna Elfman and Patrick Wilson.
The film has already been extremely well received by selling out the opening night of the Virginia Film Festival and having won “Best Ensemble Cast” after three sold-out screenings at the Bentonville Film Festival. One of the most successful major distributors in independent film, Picturehouse, picked up the film for a nationwide domestic theatrical release with Altar Identity Studios (a Media Society Company) funding the distribution cost.
Picturehouse previously hit gold when it distributed “My Big Fat Greek Wedding,” “The Passion of the Christ,” “Drive” and “Insidious.” Picturehouse partnered with Altar Identity first and foremost because its executives loved the film, but they were also impressed with the business model. Company strategy ensures having the distribution cost in-hand and ready to deploy and assures members who invested, a theatrical release.
Smart investors have a choice. They can participate in the movie industry with a real potential to beat the odds, create a long lasting revenue stream and participate in an asset class that has shown to be recession proof. Utilizing a managed-risk strategy that mitigates cost risk while it increases upside profit potential is an alternative asset every investor should be looking at closely today, instead of merely watching the public markets contract.
— Wade Bradley is the Founder and CEO of Media Society, a provider of end-to-end managed-risk investment strategies for the entertainment industry, serving high-net-worth individuals, wealth managers and institutions.