Forget what you think you know about the bad old days of film partnerships, it’s a thriving industry offering great returns as well as entertainment
Investing in film got a bad name with the old film partnerships but, believe it or not, they were set-up over 10 years ago. How the world has changed!
Investing in film and media in general is now one of the largest sectors for investing in EIS. Film is liked by the UK government because it brings hundreds of millions of revenue into the UK, secures employment and showcases UK talent, and Britain as a whole, around the world.
Plenty of new opportunities arise in film and TV because their consumption has also changed out of all recognition over the past decade due to the emergence of film on demand, with the likes of Amazon Prime and Netflix, and multichannel access to films. In turn this has led to the globalisation of audiences, and a voracious demand for more product. It has become a significant growth industry.
Like every other investment, it is hard for the ordinary investor, and indeed advisers, to know where is best to invest, and the pitfalls to be avoided. Perhaps this is even more challenging in film than most sectors. So, let’s offer a few pointers:
First, it may sound obvious, but invest in funds and companies that have the right experience from inside the industry. The film and TV industry is relationship-driven. To set-up, finance, produce, and exploit projects commercially, you need the right people with the right experience, expertise and network of contacts.
Choosing the right genre
Secondly, focus on genres of smaller budget films that are proven to be profitable. Consider backing a professional group able to identify clear target audiences for the films, tailoring them to what audiences want. For example, we at Iron Box Capital are targeting what we believe are the two of the most profitable genres in film: animation and horror.
Today a film doesn’t have to be shown in a cinema to be very profitable, given that there are distribution opportunities through countless digital channels and video on demand.
One of the key profitable genres is that of animated films that have universal appeal, but particularly in the family market.
The other area in which we at Iron Box have been focusing is that of the horror film genre. Produced competently by experienced professionals they can be inexpensive to make for what is a ready, avid, and clearly defined audience. The key market for horror is the 18-25 age group. To address this market segment we have set up a separate investee company, ‘Alive in the Morning’. This company is going to be the umbrella company for a ‘mini-studio’ for a suite of horror films.
As the name suggests, it is about a rave – but it goes scarily wrong. The film was made at Pinewood Studios in Wales. It is produced as a film for those that love horror, but with a touch of comedy.
In August 2018, Ravers had its premiere at the Frightfest, one of the top 10 horror film festivals in the world, held annually in Leicester Square. Of course, after the first showing any film producer waits with trepidation for the critical reviews that follow. We at Iron Box, were delighted to see that Ravers had attracted very favourable reviews, including from Hollywood News, which commented: ‘A well-made horror comedy that is a real crowd-pleaser.’
Such critical response has confirmed to us that our approach is right. We have produced a film that is designed for a particular audience, which means that we are confident that the film will have wide appeal. This disciplined commercial methodology informs our approach to the next films in development.
A good investment?
Inevitably we get asked if film is likely to be a good investment. As any responsible adviser will tell you: no investment is guaranteed but we would like to make three general comments:
First, that investing in film is uncorrelated with just about any other investment. So it can be a prudent investment within a diversified portfolio.
Second, we have lined up with Amersham Investment Management so that investors can invest in films and media as part of a more widely diversified portfolio across several industries if they wish. Third, our belief is that with our obsession to adhere to and create the very best practices in this industry, there is every chance that our productions will ‘repay’ those involved with enjoyment as well as business returns. We think it is worth looking at for your portfolio, as well as on-screen.
Iron Box Capital Ltd (FRN 670 397) is an Appointed Representative of Sturgeon Ventures LLP which is authorised and regulated by the Financial Conduct Authority with FRN 452811. This article is for information only it is not advice or financial guidance, please seek Financial Advice from an FCA Regulated Financial Advisory Firm.