Tuesday, December 15, 2009
No Recession At The Movies
It’s looking like movie revenues will be up around 10% in the US this year to a record $10.5 billion and also by significant amounts internationally, so thanks to the LA Times for our headline which was too good not to pinch. It’s a fitting snapshot of not just the social effect that movie-going has on people in good times and in bad, but it also sums up neatly the investment proposition that we constantly hammer home when talking about the movie sector to potential investors .
Aside from the fun, excitement and glamour associated with movies themselves and the visibility of your investment product up on the screen, on TV or on a DVD box, the investment potential of the movie sector is unrivalled. It’s a classic alternative investment, with the potential to perform extremely well whether the stock market or any other market is going up or down. Investing in a sensible movie portfolio can build great returns and balance investors’ exposure to things like stocks, property and virtually everything else. It just makes sense, the movie sector is expanding in revenues and importantly in the number of ways people choose to watch movies.
Part of our pitch has always been that the movie business makes a lot of money for a few people, and a lot of folks who invest into movies do it the wrong way and have lost a lot of their money by getting sucked in to the wrong sort of investments. We maintain that if you can line up a good slate of projects with the right sort of financial access for investors and share the burden with responsible producers then, over time, you will make a lot of money for your investors. That’s how our movie fund operates. We’ve all heard many scary stories about the Hollywood blockbusters which took hundreds of millions in revenue but never made a buck for investors because the studios managed to claim that they never made a “profit”. Well, we know the difference between revenue and profit, and whose overheads get to water down the cut, and if you can show your investors a way to split revenues with responsible producers on a formula that’s fair to all then investors will profit and return to finance your next slate.
In today’s LA Times Patrick Goldstein argues that not only is going to the movies a cheap night out for recession-hit families but there has been a greater number of mid-range movies doing well this year, with studios giving younger directors more creative leeway on movies like The Hangover. There will always be monsters like Avatar, which everyone in Hollywood is hoping like crazy actually delivers, but a bigger batch of movies doing well is great for everyone. The more opportunity we can offer investors to profit from the business then the better we’re able to finance more movies and keep the ball rolling. It’s great when making money makes everyone happy.
The Out Of Obscurity team.