A lot of people think that film investment is all about risks. And yet, investors from all over the globe are looking for movie projects in which they can be a part of. Film investment has not given the importance that it truly deserves when it comes to investment options. But the truth is that it is one of the best investments you can make, with possible returns of 10 percent per year.
The film industry has lots of things to celebrate in recent years. 2015 was the fifth straight year that UK box office topped the £1 billion mark. Not only that, the international film industry, in general, managed to grow in the recession of 2008 to 2009 by 3.5 percent.
How Does Film Investment Work?
Film investment is a long process. It can take between three and ten years to see a return. There are even instances in which it will take longer for an investor to see any return of investment. It depends on the film, and the obstacles it faces before it is brought to the big screen.
When making a film investment, the investor is bankrolling the production of the movie. The money will be used to fund the production process. It will be up to the producers to appropriate the fund to where they see fit. Before investing, there should be a clear budget to determine the expenses and an explanation as to why they need to raise investments.
There are two phases of the production process, which are development and the final process of production. The former is the earliest phase by which the rights to the script, intellectual property, or synopsis are acquired. While film investments do vary, the minimum amount is usually around £10,000.
Advantage of Film Investment
There is always a likelihood of the film to be a box-office success. Investing in an independent film with a smaller budget gives investors the change to earn more profits with less the risk of a large budget film.
Aside from the ticket sales, investors also get their share of the DVD/Blue-Ray sales, Video on Demand subscriptions, merchandise, and TV rights. The film can generate a profit for a long time.
Aside from the financial benefits, investors can also see their names in the end credits of the film. There are instances wherein their opinions are asked during the production phase, as well as invited to the premier event for the movie.
Good news is that the film industry has the support of the government via tax cuts and rebates. One of the tax vehicles is the Enterprise Investment Scheme that was launched by the UK government in 1994. Its goal is to make more people invest in unlisted but high-risk companies. As compensation for the risks, the investors get several tax advantages.
As you can see, film investment should never be overlooked if you are looking for investment opportunities. It is important that you do a lot of research first before investing in a film to ensure you are getting a good deal.