For some investors, the highs and lows of the traditional stock market don’t offer enough excitement; they want more action and more drama—and they’re finding it with film financing. These savvy investors are well aware of the high risk that comes with financing films and are finding ways to minimize the potential for loss, says Rocky Shi, founder/CEO of media company Rise Entertainment and a film and television investor and producer.
Passion Takes a Backseat
In times past, investors might have backed a passion project from inception, staying the course for years based on nothing more than a gut feeling even if actors, writers, or studios withdrew their commitments.
To reduce risk, investors today are approaching financing with a firm focus on the “business” part of the phrase show business. They are coolly leveraging the extensive data analytics available in online marketplace platforms such as slated.com and filmmarkethub.com where they can carefully select a film to back purely from a scoring standpoint.
These data points offer analysis of project metrics on elements such as strength of script, cast, production team, financial and distribution projections, etc. While it’s important to keep in mind that qualitative scoring values are subjective to each platform’s data and scoring methodology, projects with a higher score have a higher anticipated ROI and receive curated status and are then offered to investors as cream of the crop (and thus, less risky) offerings. Another safety measure: the process facilitates investor vetting as well.
Why Not Join the Crowd
Rocky Shi says that one cannot overlook crowdfunding when looking at ways to finance films because, while the move is not without risk, it’s also undeniable that the films which become hits make a ton of money for their investors.
Various sources have different vibes: Seed & Spark focuses on features, shorts, documentaries, and experimental work for festivals and independent cinema; Indiegogo is currently the top crowdfunded film producer; and Junction offers curated investments in projects with professional film investors.
Content and the State of Streaming
In a frantic dance to attract and keep viewers’ attention, streaming platforms (e.g., Disney+, Netflix, HBO Max, Amazon Prime Video, Apple TV+, Paramount+, Peacock, etc.) are being fed by a rich river of content and it is estimated that for the 2022 content spending vary widely, ranging from approximately $140 billion to more than $230 billion.
To push that content, everything from free trial incentives and specially priced bundles to adaptations of popular video game franchises (Halo, Paramount+) and sensational stunts (Netflix’s live-streamed vampire attack experience in March 2021 to debut action-horror film Blood Red Sky) are being employed to lure viewers into libraries of original content not available anywhere else.
Rocky Shi explains that streaming platforms and distributors are well-positioned to take advantage of the wealth of content from newcomers and established filmmakers. For example, Warner Bros. Discovery’s HBO Max created a new branded content studio to connect with and expand its IP. Disney is leveraging its historic library as well as current franchises to expand its streaming offerings.
Meanwhile, Netflix continues to fund many projects that push the envelope in innovative storytelling.
Many Choices as Momentum Grows
Ultimately, investors who want to back movies will have no shortage of investment roads to travel individually or cooperatively, especially considering the increased speed with which feature films enter post-theatrical distribution.
For modern filmmakers, statistical analytics will figure prominently in whichever investment pathway they choose, doing their best to quantify reasons for success and reduce uncertainty in an industry where—although numbers may add up—audience tastes can never be entirely predicted.
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