Financing of Motion Pictures in India

Term Paper submitted in partial fulfilment of the requirements for the course

OfFinancing of Firms

Submitted to

Instructor: Prof. Sidharth Sinha

On 12th November 2016

by

Sebastin MJ- 15319

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

Financing of Motion Pictures in India

Sebastin MJ

Abstract

Film Industry is a growing at a rate of 11% CAGR in India. The changing times have resulted in the changing patterns in the film financing also. This paper aims at exploring the various film financing methods that are used in Indian Film Industry like individual investing, presales, Loans, etc. It also analyzes the various revenue streams for the movies.

Keywords

Film Financing, Motion Picture Financing, IDBI, National Film Development Corporation, Bollywood, Distributors, Completion Fund

Introduction

Film financing is a branch of project financing. Investors who finance films get their returns as revenue from the box office collections, film rights, etc. A lot of aspects plays in the success of a film like star value, artistic merit, public opinion, competition, distribution, marketing etc., which essentially means the risk is very high. As much as the risk is high, the investor expects high returns for the risk taken.In Fy16, 1902 films in 41 languages were certified by the Indian censor board. The Indian film industry has a gross box office collections of $2.1 Billion and expected to grow at a rate of 11% CAGR to reach $3.7 Billion. The Cable and satellite rights also play a role in the revenues of the films and is expected to grow at a rate of 15% CAGR. 12

There is a great disparity between the number of movies that are produced and that are released. Furthermore, the number of movies that are even able to break even the production cost are still lower. Average return on an Indian movie is 40%, which maybe further drill down to above average (movies which succeed to get investment back) movies which have around 97% returns and below average movies which have -21% returns. The numbers itself tells the high failure rate of the movies while, out of those which perform, the metrics are enhanced by the stellar successes of very few films.3

The number of movies produced in the Indian Film industry is higher than that of the Hollywood. But the total cost of movies & gross box office collections is lower than Hollywood. This is due to multiple factors that are inherent to the Indian Cinema. First of all, the purchasing power of the audience is lower than its counterpart permitting only lower ticket prices. Secondly, the market is highly fragmented, creating local movie industries based on languages. This caps the revenue potential of the movies compelling the producers to keep the budgets at a limit. Similarly, the income from a movie after the initial screening in theatres are less compared to Hollywood. The sales of DVD and other physical mediums are diminished by piracy. The sale of digital copies through online media like Netflix, iTunes etc. have not picked up in India due to low internet penetration and lack of infrastructure.

This revenue structure and audience characteristics has affected the financing of the movies in India. The low cost and high return of investment has attracted lots of individual investors in to this field. Before 1960s there existed studio system for production of movies. Movie studios would engage in long term contracts with the artists and produce movies. By the collapse of the studios in 1960s, the artists began freelancing. This was the beginning of star

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system in the Indian movie industry. The fragmented industries brought in a lot of star power to the actors and since the hero and heroine in a movie affects the revenues of the movie, often the main actors’ fees started taking up a big chunk of the total cost. Many of the actors opened their own production companies in order to make the most profit leveraging their fan base.

Financing of the movies are also affected by the distribution system of the movies. Apart from the multiplexes and part of the ‘A’ class theatres, others does not have a solid revenue reporting system. This undermines the tax systems in the country. ‘B’ & ‘C’ class collections are not reported properly for tax purposes, which allows leeway for the producer to manipulate his books. Many individual investors’ objective have been to mask their tax liabilities of other businesses through film production. Historically Indian film industry, especially Bollywood had been associated with underworld due to these loopholes. But lately, the interference of the illegal funds has been reduced significantly.

Methods of Financing Films in India

After the conferral of Industry status to the Indian film Industry, the financing of the movies has been more transparent and efficient. Government of India constituted a Joint Institutional Committee on financing entertainment industry in late 2000 headed by the Ministry of Finance – Department of Banking. Industrial Development Bank of India (IDBI) and Industrial Finance Corporation of India were the members of the committee. The JIC laid down the following norms for the financing of the entertainment industry. These were applicable to all the financial institutions including banks, insurances, equity funds etc.

1. Institutions should extend finances only to corporate entities.2. Besides negatives, music rights, satellite TV rights and overseas rights must also be

considered as security.3. Insurance companies must extend insurance cover for films and develop more products

for the industry.4. When financing a single film, the duration of advance may be restricted to –between 6

and 18 months.5. Banks and FIs should work together with producers to evolve standards for financing and

insuring films.6. Creating a film industry-rating agency by pooling people from banks/FIs, eminent

filmmakers and experts in the media sector to judge a filmmaker's credentials. 4

This had allowed more investors to come in to the industry and the film financing structure has been gradually changing ever since. Also the technical disruptions in the Video-Audio and Networking sector has affected the revenue models and thereby the financing methods.

Individual Investors

Individual investors finance the move through proprietorship or partnership. This was the popular and perhaps the only financing method of movies in the bygone era. Individual investors finance the movie solely or by coproduction under their independent labels. Film producers puts in most their earnings from their previous films into the film production. They are fired by their passion to take such a risk and this surely ensured that the films they select for production have much better chance of succeeding in the box office. The individual

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Investors often has to take loans from other lenders such as Banks, private financiers etc. to complete the movie when the expenses outrun the budget.

Many of the movie directors and actors also have taken up the cap of the producers in search of better return for their investment in movies. Amitabh Bachan started the trend with his Amitabh Bachan Corporation. Soon after Shahrukh Khan have his Red Chillis entertainment, Amir Khan have Amir Khan Productions etc. These companies usually produce movies with the proprietor actor being the protagonist or otherwise very low budget movies with newcomers. This helps them to keep the cost very low by excluding the actor’s fees which they don’t need to pay, but can cash in on his brand name in sales of rights and help in pulling audience to the theater, that even if the movie is not a box office hit as they expected, they will not lose money, while a success would means stellar returns.

Unfortunately the individual investors financing a film had become a forefront for money laundering since the expenses are not much transparent and the earnings can be accounted as white money. Many of the relationships between film industry insiders and the underworld had come up in the media where, the underworld had loaned money for the movies or have other ties with the crew. The industrialization of the films have ensured that the film producers are getting better deals from banks than that from the private parties and the rise of the corporates in the movies has ensured the accounts are transparent.

Lenders

Lending for movies takes place from Banks and from other informal sources. Banks like IDBI, Exim Bank (Export-Import Bank of India), Yes Bank, Union Bank have ventured into the movie lending space. Informal sources like private/ individual lenders had been a prominent financing mode in the film industry and they still continues to play a part in the financing scene.

The Bank financing of the films started only after 2000, when the Government of India granted Industry status to the Film Industry enabling them access to bank loans to finance the movies they produce. This has also allowed other formal financing sources to enter the industry. The formal financing has resulted in a structured film making process with adhered timelines and transparent costs.

There exists a mandate from Reserve Bank of India limiting the lending to the film Industry by banks at a 50% cap of the budgeted cost of the film. The promoters has to finance the 30% of the budget and the rest 20% is financed from the sales of distribution rights, music sales etc. The Banks lends for film making considering the project period to be around 1-2 years. The repayment period is usually 18 months with interest rates hovering 2% above the interest rate for other loans at almost 15%-16%, much less than the 30-50% that the underworld and loan sharks used to charge.

IDBI Bank, which is pioneer in film financing in India and one of the active players in the film lending business had a business of Rupees 200-250 crores in 2010 financial year. It has produced movies like Aankhen, Kuch Tum Kaho, Gunah, Rishtey, Main Prem Ki Diwani Hu, Hum Pyar Tume Se Kar Bhaiten, Uff! Kya Jadu Mohabbat Hain, Janashin, Kuch Na Kaho, and Qayamat. It has also produced regional films like Kuch Hum Kahen Daddy (Telugu film), Jogi (Kannada film) etc. Similarly the Exim Bank had financed some of the movies like Dhoom, Dhoom-2, Fanaa, Bunty aur Babli, Veer Zaara, Ishqiya 2, Satte pe Satta, Judwaa

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2 and its annual lending to the film industry stands at around Rupees 200 crores. Movies like Break Ke Baad and others were financed by YES bank. Central Bank of India had financed for movies in the likes of Ishq in Paris.

The banks have lost their initial enthusiasm in financing movies that existed after industrialization of the film Industry. This can be attributed to many bad loans that were given out during the initial periods. The change in the production-distribution system are also said to have a hand in this. Earlier once the distributer pays the minimum guarantee payment for the movie, the producer used to start repaying the Bank loans, ensuring the loans get paid no matter what the performance of the movies is at the Box office. The Negatives of the movies are the collateral for the bank loans and this earlier system ensured that the bank loans got paid first. Now the system of minimum guarantee is does not exists and the producers find it difficult to pay the bank loans and get the film released making the loans a non performing asset to the banks. From the banks side, the opacity in the film revenue model does not allow them let the film release and then allow for the payback.

Considering how fragmented the film Industry is and unpredictable nature of the success of a movie, banks are reluctant to finance the movies with promotors and actors with no credible history. This said, the Banks are interested in lending to bankable production houses which shows professionalism, transparent balance sheets, and adherence to schedules like Dharma Productions, Yash Raj Films, Excel Entertainment, UTV Motion Pictures, and Eros International etc.

The informal lending business works on personal relationships and are usually lacks transparency and have high interest rates. The producers who have no track record only turns to these as the last means to finance these films so as to release their films somehow.5 6 7

Presales

Presales is one of the most important aspect for financing a film. Presales includes the sales of distribution rights, music rights, overseas rights, satellite rights, Home video rights etc. Music of the movie is released very earlier than the actual movie and can also be considered as an advertising with user paying for it. The distribution rights are often sold even before the movie is completed based on the director’s and scriptwriter’s track records and the star power in the movie. This eventually helps the distributor to become the co-producer for the movie. Otherwise the distributor takes up the movie after previewing the final cut and analyzing the complete movie. The overseas distribution and satellite rights also the same suit, but the option for the sale of right exists even after the release of the movie in the domestic market to gather the response and command the most premium for the critically acclaimed movies.

Presales is considered a growing revenue model for the films. Due to the increasing penetration of internet & associated piracy of the content and the increasing number of movies being released, the producers had to resort to various means to keep a check on improving the profitability of the movie to the maximum. One of these was to reduce the time interval between the theatrical release and the release of the movie in television and home video. This has reduced the time period in which the movie will collect from the box office. This strategy has increased the percentage of revenue from the non-theatrical sources.

Distribution includes the activities related to distributing the movie to the film theaters. Distribution right sales are only avoided by production houses which can afford the whole

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budget of the movie, which takes up the distribution by itself, which help to avoid the distribution cost and amass the whole profits. The sales of distribution rights earns the producer a minimum guarantee fees which accounts up to 30% of the budget of the movie. The Film Distribution Association of India has divided the movie theaters of different states into 11 circuits (Central Province (parts of Maharashtra, Madhya Pradesh) Central India (parts of Rajasthan, Madhya Pradesh), Rajasthan, Punjab, Delhi-Uttar Pradesh, Bombay, Nizam (Hyderabad region), Tamil Nadu-Kerala, Mysore, West Bengal and Assam) for the efficient distribution of films and there are different distributer for each circuits of them. This helps the regional distributors to focus on their dominant playing field with tested tastes in movies helping them select movies for the intended audience. Sometimes the main distributer may buy the rights for the movie for the whole country and rent out or sell the rights to the local players later. 8

International distribution right sales are similar to the national distribution rights sale. International distribution rights give the producer up to 25% of the budget. In most cases where the success of the movie is questionable the rights are sold after the theatrical release in India.

Unlike its western counterparts India doesn’t have much of a musical industry apart from the movie industry. About 80% of the music sold in India are film songs. Sony Music Entertainment (India), T-Series, Saregama India Ltd. (HMV), Universal Music (India), Crescendo, Tips, Venus, Virgin Records, Times Music, Magnasound, Milestone etc. are the leading Music Labels in India. The Indian Music Industry is worth around Rupees 1150 Crores. Out of this around Rupees 450 crores are lost due to piracy. Rupees 400 crores are earned through the sales of Film Music and Rupees 15 crores are earned through the sales of Mobile Ring tones. Rest is earned through the sales of the Non Film songs and music. The Music is sold through physical mediums such as vinyl, CDs, and through digital mediums. Digital music through likes of iTunes, Hungama, Gaana, Saavn etc. already displacing the physical mediums and the music streaming like iTunes, Pandora, Spotify, Sound Cloud, Hotstar, Gaana are also gaining popularity.

The music labels pay the film producers according to the expected popularity. Normally for big budget films with popular composers, singers and stars the rights are sold for anything between Rupees 75 lakhs to 2 crores. Music rights of ‘Dilwale’ was sold for 19 crore rupees and ‘Prem Ratan Dhan Pao’ was sold for 18 crore rupees to Sony Music. Lesser budget films get around Rupees 15-60 lakhs and lower budget movies get around 5 lakhs. Music sales accounts for around 10% of the movie budget. For movies that are riskier, the labels might agree to only for a profit sharing basis and this might not help the producer in financing the movies. The labels plan their CDs according to the possibility of hits and for the big budgets they plan up to 30000 to 40000 CDs and 20000 for the medium budget and 10000 for the low budget movies. Apart from it Most of the music labels have their own digital music stores or association with similar music stores. Also many of Music TV channels and radios pay a subscription for the use of the music in their media. 9 10.

The satellite rights for the movie are sold by the completion of the movie by the channels accessing the sale-ability of the movie in the channel by previewing the prerelease versions and often based on the star power. Satellite rights gives the producers a part of the financing required for the release of the movie in the theaters. The sales of the satellite rights gives back

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around 20% of the movie budget to the producer. The movie ‘Dhoom 3” was sold for a whopping 65 crore rupees to Sony TV, whereas the whole budget for the movie was around Rupees 155 crores. In a similar fashion, TV channels are roping in film stars for a bunch of films to be released in the couple of years for astronomical sums. These include exclusive talk shows and other film related programs in their shows. Salman Khan has contracted with Sony Network for five years (between 2013 and 2017), for 450-500 crore rupees for his ten films. 11 But this is a risky business for TV studios as the rights are bought before the movie release and the TV viewership and the advertisement revenue depends much on the box office performance of the movie. Sometimes when the producers finds that the satellite rights offers are lower than the expected royalties, they can wait till the movie release for the rights sale, given they can afford it.

The home video segment is also gaining popularity. The home video segment is changing according to the physical mediums used. The early version used video cassettes, which later changed into VCDs and DVDs. Now the latest physical medium that is wide spread is the Blu-ray. The improvement in the technology helps the audience get a better movie watching experience while the producers can get a premium out of it. Now the latest trends are Video on Demand (VOD). These are provided by most of the Direct to Home (DTH) television providers and many internet websites. The VOD releases are frequently coinciding with the DVD & Blu-ray releases. Home video right sales earns the producer around 10% of the movie budget. ‘Vishwaroopam’ a Tamil movie was reportedly sold for 40 crore rupees in DTH rights to Airtel for releasing as Video on Demand at 1000 rupees on the same day as that of the theatrical release. 12

Co-productions

Co-production is currently the most popular financing method in the Indian film Industry. Two or more production banners or distribution companies associates themselves for the production of movie and share profits accordingly in a coproduction deal. This helps the companies to raise capital that they cannot independently afford. The most common coproduction is between the producer and the distribution companies. Most of the film actor/director owned production companies coproduce movies with the established labels to benefit both the parties. Through coproducing the individual actor’s fees can be waived off benefiting the distributer in terms of initial cost and the capital to be employed by the other side is also lower due to the coproduction, which normally they cannot afford alone. This also ensures that they get a lion’s share of the profit rather than the fixed acting fees.

Common stock offerings

Common stock offering has been a strategy for many movie labels to attract capital for their projects. Eros International did IPO in September 2010 and rasied 16.7 Million pounds. They also secured funding from City group global markets in tunes of 100 Million Dollars. Similarly Studio 18 /The Indian Film Company in association with Viacom had raised 55 million ponds listing in the London stock exchange. UTV listed in London Stock exchange as the United Motion Pictures and have raised 70 million dollars’ worth investment. Walt Disney Company holds 32% of shares of UTV. Balaji Telefilms, which produces movies under the label Balaji Motion Pictures Limited had raised a capital in tunes of 35 crores through selling 2.8 million shares in 2000. Some of the movie labels like Adlabs refrains

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from the common stock offering because they are funded by corporates like Reliance which in turn is funded through the stock market. 13

Currently UTV-Disney & Balaji Motion Pictures are rethinking their strategy after the failure of some of the most hyped pictures like Mohenjo-Daro, Great Grand Masti, Kya Kool Hain Hum 3, Azhar etc. in the box office.

The entry of the corporates into the film industry as opposed to the individual produces have brought in some better discipline into the movie industry. This has also increased the spending budged of the movies, which individual investors cannot afford. These movie labels works on the principle that even if half of the movies flop on the box office, the success of the rest will help them to show a profitable balance sheet to the investors.

Private Equity Funding

Private equity funding is only a recent phenomenon in the Indian film industry. The first of such happened in 2014, when two private equity funds RW Media and Callista Capital invested an undisclosed amount in Abundantia Entertainment for a 49% stake. RW media is another production company based in Mumbai while Callista Capital is a private equity firm based in Singapore. Many other private funds have come up since then. Indus Media Capital has announced a 50 million dollar fund. Similarly Bend It media has launched a 30 million dollar, HBS Raksha Movies Fund has announced a 200 crore rupees and Cinema capital has launched a 170 crore rupees funds to finance Indian movies. There are also funds like DAR and High Grounds Enterprise Limited etc. which provide film financing.

Film funds had been in existence in India long time ago itself. Religaare-Vistar, one of the funds was a victim of poor selection of movies to invest into and had to be closed after the movies like Mausam and Victory which it produced failed to make it in the box office. The promotors of the private equity funds usually includes highly experienced professionals in the film industry who can assess where the funds are to be utilized and where not to. Most of the funds are also pressured from the investor side for better ROI and they often make poor investment choices than to wait for a sure shot success one in order to show that the money is at work. The film industry is plagued by various issues like opaque cash dealing, non-adherence to timelines, poor governance etc. which the investors need to be aware of. The rise of corporates in the industry has started to reduce these issues and began to make the industry an investor friendly one. 14

Government Funding

Across the world films has been produced and used by governments as a tool for propagating their propagandas. Now a days the governments provide aid and subsidies to movies mostly in order to promote tourism to their country. Countries like Malaysia, Turkey, Spain, US (New York City) etc. provide subsidies for the movies that are shot in their country using their citizen in crew. Many Indian films make use of these discounts by shooting a portion of the movies at these countries. Apart from it local governments in India had also financed movies at times. For example, Satyajit Ray’s epic ‘Pather Panjali’ was financed by West Bengal Government. There also exists the central government established National Film Development Corporation Ltd. (NFDC) with the aim of promoting parallel cinema. It has funded and produced around 300 films till now, out of which may have won critical acclaims and national awards. Films selected for NFDC funding gets 30% of the approved budget or 1

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crore rupees whichever is lower. International funds also exists like The Global Film Initiative aimed at Asian, African, Middle Eastern and Latin American films that focus on cross cultural exchanges and World Cinema Fund which funds movies that offers a new experience to the audience. 15 16

Completion Bonds

Movie production is a risky business with thousands of variables that must come together to complete the final version which will come to the theater. Completion bonds are a type of financial instrument which help the producers to insure the movie project. It insures that the movie will be completed even of the producer cannot afford it any more or any other foreseeable reason. Most commonly it is used along with a debt, with the lender coercing the producer to include the completion bond.

US based firm Film Finance Inc. is offering completion bonds in India. They have already got eight films which have subscribed to this product. These bonds only take care of film completion and cost overrun. The premium of these bonds comes around 3-5% of the total film budget and is approved only after thorough scrutiny of the budgets and production schedules. These bonds mitigate risk to both the producers and lenders 17

Product Placement

Product placement provides an advertising platform for the marketers. Since many of the Television advertisements use film actors for the promotion, the similar or better effect can be achieved by a product placement in movies which have deeper emotional content that the 30 second advertisement. The major products that are promoted includes beverages, automobiles and clothes. One of the earlier instance of product placement may be said in the 1967 film “An Evening in Paris” where the heroine sips from a Coca Cola bottle. 18 This is a continuing trend and even movie songs can be seen associated with the product names in it. But these provides only minor funds to the production.

Crowdfunding

Crowdfunding had been popular only recently with smaller independent films reaping benefits out of it. In this model, the basic ideas of the movie are published in a crowdfunding website like Kickstarter, Indiegogo etc., where individuals can invest in the movie, who will receive benefits like movie branded merchandize and preview shows etc. More Indian movies are yet to see this model for financing, in the ever growing world of internet. But even before the advent of internet, a 1976 Indian movie was crowd funded. The Shyam Benegal movie Manthan was produced by the Gujrat Co-operative milk marketing federation Ltd. or popularly known as Amul with each of the member donating rupees 2 towards it. It won the national awards and was India’s official entry for Oscars.

Cost drivers

The largest share of the expense is towards the payment of the actor compensation. In Indian film industry this can come as high as 40% of the total cost, while in the Hollywood counterpart it is only below 20%. The actors might be even willing for a profit sharing basis for compensation and reduce the acting fees. Since star power is one of the biggest selling point in the Indian film marketing, it is almost always unavoidable to get the required star for the big budget movie. The next part of the expense goes towards the compensation of the

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other actors, director, script writer, music composer, singers, and other crew. Expenses are also counted for the film shooting in terms studio, equipment rental, location expenses, travel, food etc. Producers are required to pay for post-production expenses such as VFX, editing, dubbing, etc. The distributors are in charge of advertisement, marketing and holding the events such as music launch, TV shows, press conferences etc., in order to boost the publicity. Since the physical print has almost given way for digital broad casting, the costs are cheaper. The broadcasting costs are incurred by the distributer and is on per show basis. The entertainment tax and the local municipal taxes are to be paid by the exhibitor and is based on the number of tickets sold.

Revenue model

The revenues comes from different sources apart from the primary theatrical performance. Most of the revenue that comes before the release of the movie in theater is reused to finance the film. Counting from the starting of the movie, the revenues are the product placement advertising fee, Music right sales, Satellite right sale, overseas rights sale, distribution rights sale, Home Video right sale, Merchandize sale royalties etc. The agreements are always customizable and can be outright purchase or revenue sharing models. Merchandize sales includes all the products sales like clothing, fashion accessories, video games, action figures and any other products that are branded by the film name, characters, etc. which are often sold after the film becomes popular.

There exists a variety of agreements that used between the distributor and the producers. This includes profit sharing, Commission model, Minimum Guarantee and Royalty Models, Outright sale, Theatrical Distribution and Territorial rights. In most cases, the advertisement and marketing are the responsibility of the distribution company. They are also in charge to negotiate with the exhibitors (theaters) for the release and the profit sharing among them. They are in charge of reaching agreement with the digital partners like UFO for the technical distribution.

The revenue sharing between the distributer and the exhibitor is also agreed upon. Normally the first week collections are divided among the distributor and exhibitor in a 65:35% ratio. The second week it becomes 60:40 and the third week it becomes 55:45. From the final week onwards there is an equal splitting of the revenue. This equal splitting of the profit is known as flat in Indian film terminology. If a film does not gather 70% of the seats throughout the day, it is termed as a hold over. If a film holds over, the profit share of the distributor is reduced by 10 percentage in the first week and 5 in the subsequent weeks. For the multiplexes the numbers are different due to the operating dynamics they follow. Multiplexes have a 50:50 revenue sharing in the first week which reduces to a 30:70 ratio in the fourth week onwards. This may be accounted due to the higher operating expenses for the multiplexes and the higher ticket charges they exert.

Performance of the movie

Profitability of a movie in the box office is still a hit or miss game. The producers try to reduce the losses by selling off the satellite and overseas rights before the theatrical release itself in order to redeem a large portion of the expenses. Heavy advertisements are also done to pull the crowds to the theater in the first week itself before the reviews and mouth to mouth

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publicity of the movie can affect the revenue of the movie. This also helps to alleviate the effects of piracy that may take place later.

Profitability of a movie depends on thousands of variables that make up the movie. Profitability of a movie can be estimated beforehand itself for budgeting purposes using various mathematical models available. These models are based on econometrics/quantitative and human behavioral sciences. For example a quantitative algorithm created by Darin Im and Minh Thao Nguyen was able to predict the box office profitability of a movie with 72% accuracy. A large number of variables like budget, genre, rating, production studio etc. were used for the study to forecast the gross revenue from which the profitability was calculated. Similarly an algorithm based on neural networks by Ramesh Sharda was able to predict the box office revenues by 75% to a closer class match. The variables that were used in this study were MPAA ratings, Competition, Star Value, genre, technical effects, sequel and number of screens. These studies require film performance data for creating their respective models and by providing the data for the Indian movies, comparable results might be obtained. 19 20

Conclusion

Entertainment Business and Movies in particular is a content driven industry where the success and the profits are based on how the audience accepts the product. This implies that the risk associated with the industry is very high as much as its revenues, and so only those investors who have such affinity for risk should venture in to the film industry. But if the cards are played right, with adequate star power, advertising and popular creative artists, a producer can get a return on his money from the presales itself, even before a theatrical release. Also heeding to the technical advancements in the film making and networking area especially in the internet and social media can be helpful in identifying new opportunities for marketing and selling the products in the new horizons.

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References

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