There’s a lot happening at the moment, despite the grinding economy and continuing global financial woes.
It’s not as if it’s stopped people from progressing; more that it’s just slowed it up a bit. After all, everyone still has to make investments to secure their future financial security, even if on occasions it feels a touch like stirring treacle. But we’re resourceful creatures, and imaginative and creative, too, and most often we’ll figure a way around an obstacle/find a solution to a problem, given enough time and motivation. Necessity is, of course, the mother of invention. Very few of us actually go under; most go sideways, and the mavericks go over.
Making movies is a case in point. They’re generally rather expensive to produce and risky as an investment. And yet more people are going to the cinema now than ever before, even in the depths of this recession. I have no idea why. But because there’s not much money around, not enough people are making enough product to satisfy demand (quality product, that is, not art house nonsense).
But movies don’t need to be expensive, if you’re creative and inventive. What required an edit suite to achieve a few years back, can now be accomplished on an Apple Mac at home in your study. And I met with a chap only last month who’s done just that and is set to make a fortune, and not necessarily a small fortune, either, but potentially a large one. It helps that Tim Burke is an exceptionally brilliant director/ producer combined with a high degree of commercial acumen. You should watch the trailer for the movie he’s just made on a shoestring budget (The Harrowing).
It’s phenomenal. And I mean really phenomenal. Tight, sharp, gripping, original, clever, ingenious, intelligent, with not so much as a nanosecond dropped. But his talent doesn’t stop there: there are the cunning publicity stunts that command sheaves of press coverage for free; the skilful involvement of major movie players for pennies on the pound; the gaps in the market Tim has identified and successfully crafted product to fill. This simply, simply, simply just isn’t hyperbole; they are as accurate and as valid statements as to the worth of the individual as it gets. Witness his charity movie role enterprise, supported by the likes of Bono – which is another of Tim’s inventions. And now I’m on the case to help him raise funds for his second movie, and the third.
They’re all horror flicks, and they don’t really appeal to me … but who cares! I don’t need to watch them. This is an investment , not a lifestyle choice; they appeal to the market, and that’s all that counts. Witness …
Oren Peli and Jason Blum, writers, directors and producers, who together made $22.5 million in 2009. Their first film, Paranormal Activity , cost less than $15,000 to make, yet grossed over $200,000,000. In recent years low budget horror movies have made bigger impacts than ever imagined. The Blair Witch Project and Paranormal Activity are the most profitable products/films in cinematic history, the latter having produced a 414,000% return on investment! The Blair Witch Project cost $35,000 and made $248,000,000. Open Water (which was terrible) cost $60,000 and made $55,000,000. Halloween cost $225,000 and made $107,000,000. Friday the 13th cost $555,000 and made $117,000,000. Now that’s seriously impressive.
In my role as Editor of GAUK, we are offered dozens of cinematic and theatrical opportunities on a monthly basis. Following the success of The Railway Children (125% profit in 9 months), and having funded its London re-staging and North America debut in under two weeks, we’ve developed a reputation for shrewd media investment. But we reject almost everything that comes through our door. But not this one. I shall keep you posted as to how our involvement with Tim Burke progresses. My colleagues in the property world are also inventive. I have a friend who owns a mobile home park. Sales are slow in this market, even though prices are low compared to bricks and mortar. Again, people don’t have the cash to splurge £30k on a holiday home that’s got to be paid for in cash.
However, never missing a trick, he watched a TV programme recently (Channel 4, Country House Rescue ) where that bright-coloured lumpy woman goes around telling crusty blue-blooded families how to monetise their land. And she introduced yurts to one stately home (it’s like a large tent, but with a proper bed, wood-burning stove, water and electric on tap – like a hotel room in the garden made from canvass – see photo). Apparently they’re very cheap (say £5,000), but can rent out for up to £400-a-night, especially at the moment cos they’re trendy, see.
Okay, so that’s in the grounds of a country house, with probably some nice facilities on tap. But even in a mucky field in Wales people would still flock, I would hazard, even at £100 a night. Now, do the maths. So, you’ve got a bit of infrastructure to prepare, like piped water and running electric cables, furnishing and decorating etc, but even so that’s £700 per week per unit. Even if the cost doubles, once suited and booted, to, say, £10,000 per unit, the whole shebang is paid for in 14 weeks, which is a British summer season. Next year and all subsequent years it’s all profit. And I know full well how easy and cheap it is to advertise such rentals on the internet. What’s more is that you don’t need planning permission, because they’re considered to be temporary structures (indeed in the winter they can be taken down and stored).
However, my friend doesn’t have much cash to splash, so here’s an investment opportunity for you: you buy a yurt for £5,000 and lease it to him for an excellent yield (you might even get as much as 50% pa, which is a damn sight better than bank deposit interest – and, of course, secured on the yurt itself). Alternatively, he’ll sell you one of his mobile homes for £30k with a guaranteed buyback in 12 months time of 115%. And if you want a proper foray into this lucrative world, then he’ll sell you 10% of his site, which is projected to be worth 6 times its value in 3 years. That’s how Deborah Meaden of Dragons’ Den made her money. Lots of opportunities for large or small sums, all secured on property (so very little downside risk), and all of them kick the benefits of keeping cash in the bank into touch, especially when, after tax, you’re earning half the rate of inflation these days.
Making movies is an intriguing yet complex industry. It involves substantial financial investments and carries inherent risks. Despite these challenges, the movie industry continues to thrive, attracting audiences to cinemas worldwide. In this section, we will delve into the economics of making movies, exploring the factors that make film investments both costly and potentially rewarding. We will also examine the current demand for movies and the impact of financial constraints on the production of quality films.
Understanding the Cost and Risk Factors: Producing a movie entails significant expenses, ranging from pre-production to post-production stages. Costs include script development, hiring cast and crew, securing filming locations, set construction, visual effects, marketing, and distribution. These expenses can quickly escalate, particularly for big-budget productions aiming for high production values and wide-scale releases. Consequently, investors must carefully consider the financial risks involved and conduct thorough cost-benefit analyses before committing their resources.
Let’s delve deeper into these factors to gain a better understanding of the financial implications and challenges associated with making movies.
- Pre-production Costs: The process of making a movie begins with pre-production, which includes developing the script, acquiring rights, hiring a director, and assembling the creative team. These upfront expenses can vary greatly depending on the complexity of the project and the talent involved.
- Production Expenses: Once the pre-production phase is complete, the actual filming takes place. This stage entails costs related to location scouting, set construction, equipment rental, hiring actors, and managing the logistics of the production. Big-budget films with elaborate sets and extensive visual effects tend to have higher production expenses.
- Post-production Investments: After the filming is complete, the movie enters the post-production phase. This involves editing, sound design, visual effects, music composition, and other technical aspects to bring the film to its final form. Post-production costs can be significant, especially for films that require extensive post-processing or intricate visual effects.
- Marketing and Distribution: To reach audiences and generate revenue, movies require effective marketing and distribution strategies. Advertising campaigns, promotional materials, film festival submissions, and securing distribution deals all contribute to the overall cost. These expenses aim to create buzz, build anticipation, and ensure the film reaches its target audience.
- Uncertainty of Box Office Performance: One of the primary risks in the movie industry is the uncertainty of box office success. Even with significant investments, there is no guarantee that a film will resonate with audiences and generate substantial returns. Factors such as competition, timing of release, critical reception, and audience preferences can greatly impact a movie’s commercial success.
- Market Demand and Audience Trends: Understanding the current market demand and audience trends is crucial for determining the potential success of a film. Changing demographics, evolving viewing habits, and shifting preferences can influence the demand for certain genres or types of movies. Investors must stay attuned to these trends to identify opportunities and mitigate risks.
- Financial Viability and Return on Investment: Investors must carefully evaluate the financial viability of a movie project. Assessing the potential return on investment involves analyzing factors such as production costs, revenue streams (including box office, streaming, DVD sales, and licensing), and ancillary income from merchandise or spin-offs. Thorough financial analysis and projections are essential to make informed investment decisions.
- Piracy and Copyright Infringement: Protecting intellectual property rights is a significant concern in the movie industry. Piracy and copyright infringement can significantly impact revenue streams and jeopardize the financial success of a film. Investors need to implement effective anti-piracy measures and legal protections to safeguard their investments.
- External Factors: Movies can be influenced by external factors beyond the control of filmmakers and investors. Economic conditions, political instability, natural disasters, and unforeseen events can disrupt the production, distribution, or exhibition of a film. Flexibility and adaptability are essential to navigate such challenges and minimize potential financial losses.
- Long-Term Revenue Streams: While the initial box office performance is crucial, movies can generate revenue from various sources over the long term. Home media sales, streaming platforms, international distribution, TV syndication, and licensing deals contribute to the overall financial success of a film. Understanding the potential for revenue diversification beyond the theatrical release is essential for assessing the long-term financial prospects of a movie project.
By carefully analyzing and managing these cost and risk factors, investors and filmmakers can make informed decisions and increase the chances of financial success in the movie industry. Balancing creative vision with financial prudence is key to navigating the complex landscape of making movies.
Demand for Movies and Audience Trends: Despite economic downturns and shifting entertainment preferences, the demand for movies remains robust. Audiences continue to flock to cinemas, seeking captivating storytelling, immersive experiences, and escapism. The movie industry has proven resilient, adapting to changing consumer behaviors and embracing technological advancements. The rise of streaming platforms, coupled with international markets’ growth, has opened new avenues for revenue generation. As a result, the potential audience for films has expanded, providing opportunities for investors to tap into diverse markets.
Quality Films vs. Commercial Success: While commercial success is often associated with big-budget blockbusters, the demand for quality films remains steadfast. Audiences crave compelling narratives, well-crafted characters, and thought-provoking content. Indie films and art house productions have their devoted fan base, and their success can be measured beyond box office revenues. Balancing artistic integrity with financial viability is a delicate task for filmmakers and investors alike. Strategic decision-making, market research, and understanding target audiences are crucial for maximizing both artistic and financial returns.
Navigating Financial Constraints: The film industry is not immune to financial constraints, particularly during economic downturns or periods of tightened funding. Limited access to capital can hinder the production of quality movies and result in fewer releases. However, resourcefulness and creativity often flourish under financial constraints, giving rise to innovative storytelling techniques and lower-budget productions that captivate audiences. Investors who can adapt to these circumstances and identify cost-effective opportunities may find untapped potential in the market.
Conclusion: Investing in the movie industry can be a risky venture, but it also offers opportunities for substantial rewards. While the costs of producing movies can be high, the demand for quality films continues to grow. Understanding the economics of making movies, assessing market trends, and identifying niche audiences can increase the chances of success. As the film industry evolves and adapts to changing consumer behaviors, investors who approach movie-making as a careful blend of art and business can navigate the challenges and contribute to the creation of memorable cinematic experiences.