A film is an intellectual property or “IP” for short. And while a film is widely distributed around the globe on spools of film to theaters, DVD’s to stores and homes, and digital files to computers and phones, a film is, in fact, one property. For this reason, you can easily compare the film business to the real estate business. The exact same principals apply.

In the real estate business, an investor is looking for projects to invest in that will make a profit and they usually base
those decisions on several key factors (obviously there are always unique circumstances but these are just the basics).  Besides ensuring that their money is being well-protected, investors want to make sure beforehand that what they are investing in will be certain to look and be built a particular way that is pleasing to their intended customers. 

The factors most investors would look for in a building include:

• What is the location and who is the target tenant? Basically, are we in the exact place that people want to be, and do we have the vision to build something that they want?
• Who is the developer? Does he or she have experience and relationships that we can trust as well as a vision for success?
• Who are the architect and designer? Who is responsible for the vision for the building and do they know how to bring it to life? Do they have other buildings people admire and talk about?

How much does it cost? Easy enough. Will I make a profit? Only if all these factors align correctly.  In the film business, it is very similar.  There are an elite group of people who have the talent and knowledge necessary to create an attractive and successful product.  The factors that go into any decision in the real estate market can be applied to the film market, and any savvy investor should be asking:

• Is there an audience for the kind of film that we are investing in? In this case, we are determining the size and scope of the potential audience – those that will inhabit the seats and watch the screens – combined with how good the script for the film is. Are there people out there who want to see this movie?
• Who are the producers? Do the people developing and overseeing the process of making this film have experience and a successful track record that we should invest in?
• Who are the director and any other talent that may be attached? Has the director made movies before? Is he or she respected? Are there other respected professionals involved that may even produce ancillary revenue streams like the music sound track? Do people admire their work and talk about it?
• How much does it cost? What is the budget to complete the film?
• Will I make a profit? Will the movie make enough money through all of the avenues of distribution, short term and long term, to repay the investment with a preferred return and create a potential annuity in the process?

If the answers to these questions are yes, then a film is worth investing in.  And, furthermore, there are great advantages to investing in a good movie as opposed to real estate.  Here is where the two industries differ most greatly.  Once a film is
completed, it never needs to be made again.  It does not require any maintenance, any employees, any insurance, and it does not suffer any depreciation or weather damage.  A good film is an asset that lives on accruing revenue in perpetuity.  And that revenue is achieved, as they say, by simply “pulling tapes off of a shelf."

Additionally, the world of intellectual property distribution has changed dramatically over the last ten years giving films vast new revenue possibilities. Theatrical distribution, both domestic and foreign, remain staples but even that world has shrunk as international trade, travel and communication have made it easier for films to travel and for various subject matters to be widely accepted.  The DVD business has exploded worldwide with large retailers and video stores distributing DVD’s in increasingly creative manners. The video-on-demand business (VOD) is one of the fastest growing distribution platforms in the world – most people regularly order pay-per-view movies through their cable or satellite provider, or download movies onto their computers, phones and iPods. The lifestyle distribution platforms have even grown, making movies available in planes, hotels and even mini-vans all over the world.

In the next Ask the Expert, we will explore some of these issues in greater depth.  Taking one film as an example, The Possum Trot Cloggers, we will walk through this example as well as a basic timeline for getting the film made and out to the audience.