Monday, March 29, 2010

Entertainment is a good investment in a down economy.

Now let's take this thinking into the investors and people working on
their portfolio.
Some are balking at putting their money into anything that doesn't seem to have a long tail solid foundation and so
are buying real estate and bullion, things that seem like a safe
investment, primarily because they don't trust the economy.
Let's face it it is a bear market and everything is a little shaky.
The important thing is to be patient with your choices and especially be
patient with your investigation and think outside the box.
The rule of thumb is that if your grandmother knows about a great investment deal
then it's probably too late to really capitalize on it.
Thinking outside the box when you are investing will get you places that the
masses never go because they are listening to all the "experts" which
are usually regurgitating what they were trained to say and peddling
whatever investments pay them the most to sell.
Understanding that the economy is already only so much blue sky in the first place makes
one aware of the precarious situation of investment.
Are coins and gold a good investment? Yes of course they are, because when the economy
slips as it is sure to do again then tangible assets are still going to
hold their value.
However if you want to make money from your assets you have to take risks, which is where many run into trouble or worse.
"The wrong thing to do is nothing." is a good place to start any strategy.
An investment is based on consideration of two things and it always boils
down to this so you may have heard this before and if you haven't then
you need to do a lot more research.
Rate of return
Return on investment
These are the only things that investors want to know really.
You can hype all you want and tell how your widget is going to change the way people live forever but the real investor doesn't care
they are putting their beans into the pot that shows them clearly what
these two factors will be.
This is actually part of the problem with originality in entertainment today in the US especially as I discussed
in "Hollywood and the Economy of the Calculated Sequel" an earlier blog
posted here.
one problem is that filmmakers don't know how to relate to investors and can't think in terms that are attractive to investors and so don't get backing for real original production concepts.
These are scary for investors because they can't do like a Realtor and check
comparable investments "in the neighborhood".
How can you track something like Avatar which there has never been really anything made like it
and explain it to an investor.
The truth is that this film was made and released into a bear market a down economy and yet made more money than "Titanic" (though it cost more to make) which was released into a very strong economy or a bull market in '97.
The truth is people want to have an escape from the daily grind even more when things are down
than when things are going great.
It makes sense when you look at it that way, the average person my not be able to spend $4,000 on a real
vacation but $10.00 for a movie and a genuine escape for a few hours fits into even the tightest budget.
Now let's take this thinking into investment and consider the current market.
A few thousand dollars can go a very long way with the digital age and frugal filmmaking
A new Red camera or an SLR camera that shoots in true HD can be rented or purchased for a small fraction of the cost just a few years ago so the real cost is in talent and man hours (or woman hours)
for the crew locations and editing and or CG graphics.
In New Mexico many locations are available for free from the state and the incentives
for investors are considerable.
One of the problems is that a production company has to borrow almost 2 million just to get the loan
from the state (interest free). Most filmmakers here don't relate to
that kind of money so will never get it.
The 25% rebate is like an insurance policy for the smart production that sees it as a means to
make stable payments on the initial loan until such time as profit can
be gleaned from the production.
These are all factors that not only need to be considered but developed into a proposal for the investor to
understand clearly before writing a check.
Then the distribution process needs to be addressed. It takes around 10 million to get a
proper marketing campaign into today's market through television and
internet advertising. The need to reach a person in the world three to
five times before they even recognize that there is a film,what the name
is and when it will be available. Basically "branding" the film is the
goal and it is expensive. So before the distributor is going to put that
kind of energy into a film they need to know that all the necessities
are covered so are usually working with known filmmakers as a safer
investment knowing in a sense what to expect in return.
Anyone with a hundred bucks can be an investor these days with websites like and actually help fund some original content.
There is the distribution problem to overcome and so it pays to research the filmmaker's plan to get a return on the investment and there are some very innovative plans to be considered on
those sites.
Be not afraid of the unknown. Don't invest what you can't afford to lose.
Think outside the box and you could be a part of something significant like so many films that came from nowhere like; "Pan's Labyrinth" for example.
Someone had to back that film before any frames were shot.
Some considerable profit was earned and new movie deals were made as a result with the director for Hellboy 2.
There are many examples and the project you get involved in could be one of them.