As a result of a high profile celebrity court case earlier this year, a new law governing EIS investments means that investing in UK-produced films has become even riskier. But with good intuition, due diligence and insights gained from data science, you’ll give yourself the competitive advantage when investing in UK film investment slates.
My top ten considerations for choosing film investment slates:
1. As with all investment activities, diversification is key, so minimise risk by investing in larger slates, or several slates.
2. Exercise your due diligence. Research the financial background and track record of the production company, producer, director and screenwriter. Past commercial success is a strong component in predicting future success. Stay clear of any companies or producers that have had legal action taken against them.
3. Pick genre projects if you’re purely investing for financial reasons – which genre depends on the film’s budget. On the other hand, if you’re comfortable with taking a far greater risk and are instead driven to make a cultural contribution that might take you to awards ceremonies, consider investing in drama. Choose wisely, though. Only the most compelling and original dramas breathrough (think Three Billboards Missouri).
4. Read a full synopsis of each film in the slate. Is the plot engaging and believable? Are the characters compelling? If you’re left with doubts, it’s likely the audience will be too. Ask yourself who is the audience for this film and whether they’ll want to see it.
5. Consider the casting. Only a few A-listers add significant value to box office and downstream revenues, but a well-loved actor in the right role attracts audiences. Now that you know the film’s synopsis, do you believe the actor is right for the role?
6. Understand the waterfall structure of the financing deal and comb through the T&Cs with a toothpick. In other words, know where you stand in the distribution of revenue chain.
7. At the very least, cast your eyes over the top sheet of each film’s budget.
8. Ensure all greenlit projects have a completion bond in place.
9. Wherever possible, take a look at projections for each film’s performance in the five most likely scenarios. These are best prepared by an independent analyst.
10. Learn all you can about box office forecasting and the multitude of factors that predict whether a film is more likely to be a hit or flop.
I’m presenting Moneyball for Film Investors on 18th June at Raindance. If you don’t know fully understand the comps approach, let me show you how you can learn the characteristics of lower budget films that are most likely to find commercial success.
- the attributes of film protagonists most preferred by audiences
- the relationship between a film’s runtime, critical success and box office
- the box office value of the relationships between the most and least horror film sub-genres
- and many more insights provided by film data science
Come along to Moneyball for Film Investors on 18th June.