Americans tend to go to the movies more often in times of economic slowdown. Box office sales usually perform extremely well in contrast to a general economic slump.
Movie revenues in the U.S. actually increased from 2007 to 2008, and again from 2008 to 2009, while the economy crashed. This is in part because movies are able to take advantage of multiple revenue streams, ranging from ticket sales at the box office, to sources like movies-on-demand and the rapidly growing sector of International distribution.
Even small films can have modest success at the box office which can translate into millions in profits. Due to this, independent films are now a highly sought after Alternative Investment that allows investors to obtain significant financial gain without being an A list movie star.
Independent films offer a practical and enticing opportunity to invest in the movie industry. They are not produced in major Hollywood studios and generally use a minimum budget in comparison to feature films. The budget for an independent film can range from $30 million as in The Passion of the Christ, to only a few hundred thousand dollars. While the biggest sellers at the box office are rarely independent films, they can still make significant profits due to their low costs. The independent film Juno provides is a successful example as it brought in $143.3 million with a $7.5 million budget (Avatar cost approximately $300 million!). Independent films offer investors an opportunity to contribute and to feel involved in a unique project. This involvement can be very rewarding for investors and you may even get your name listed in the credits.
How to Invest
Simply contacting an individual producer or production company is one option for investors. Independent film producers frequently have projects they need funded. There are also websites and journals dedicated to providing information on films that are looking for investors. It is essential to conduct thorough research on any film and its producers before making any size of investment. Investments are generally structured such that you cannot lose any more than you invest and usually investors are reimbursed before anybody else receives payment. There can be significant tax benefits for independent film investments. You should research this beforehand as the tax breaks can vary for each project. It is very important to understand that this is not a “short term” investment, as it is not uncommon for a successful film to take two or more years to provide a return on investment.
Many independent films fail because they are unable to secure theatrical distribution. Some reports show that in the U.S. approximately 95% of all independent movies produced fail to go to distribution. Therefore, it is prudent to invest in companies that finance, produce and market independent films. Tri Pillar Investments, LLC works with Hollywood based, IndieVest as an option for investing in the independent film market. IndieVest guarantees domestic theatrical distribution for all of their productions. Only Accredited Investors can apply for IndieVest membership and the minimum investment for most projects is $50,000.
The 5% of independent films that actually secure domestic theatrical distribution earn over $3 billion annually in the U.S. So, here’s your chance to partner with TPI and IndieVest and “make it big in the movies”.
Troy A. Buder is the Founder & President of Tri Pillar Investments, LLC — boutique Registered Investment Advisory firm which specializes in working with members of the Medical and Academic communities including Duke University, Wake Forest, UNC Chapel Hill, NC State, Emory and UCLA.