The Movie Industry

The motion picture industry is very large and successful:

Annual box office receipts		$9 billion
Annual DVD/VCR revenue		$23 billion
Premium television royalties		$10 billion
Pay-per-view gross revenues		$2 billion
Annual tickets sold		1.6 billion
Annual admissions		1.5 billion
Total movie screens		35,000
Total DVD titles		20,000
Annual films premiered		2,000
Annual theatrical releases:		only 500

Funding for major theatrical releases is provided by the major studios themselves. Many of the smaller independent films, though, are financed by film funds of individual investors.

Why Invest in Films
Very few investments can realize the upside of film. Independent films are risky and uncertain, but the reward can be worth it. The capital requirements are low, and the production time on any particular film is only 1-3 years. A conventional enterprise can take much longer to mature.

Furthermore, the success of such independent films as My Big Fat Greek Wedding and Napoleon Dynamite demonstrates that big revenue does not require a big budget.

The Movie Production Process
The creation of a movie from concept to release has several predictable phases:

• Funding secured from a studio, a bank, or a pool of investors
• Development of an original screen play or adapted from another source
• Pre-Production involves hiring the key talent and crew, creating storyboards, and scouting locations
• Principal Photography is the actual filming
• Post-Production consists of editing and adding effects, music, and titles.

Distribution
Films are now distributed in an increasing number of media and markets. Distribution to these various markets takes place in a predictable sequence, measured in weeks after completion.

• Theatrical (weeks 0 to 18)
• DVD (18 and beyond)
• Pay--Per-View (24 to 36)
• Premium TV (28 to 45)
• Specialty Markets (28 and beyond)
• Free TV (52 to 156)
• Syndication (156 and beyond)

A popular movie can produce revenue forever, but most is generated in the first year after release.

Why Invest in Independent Films
Once upon a time, movies made money in the theater. Then came video tapes, cable channels, and everything else. Domestic theaters are still a tough market for the independent film; there are only so many big screens. However, foreign markets, satellite TV, DVDs, and other markets are growing and looking for content.

We believe that nontraditional markets for movies show promise for independent films financed by independent investors. If you do also, then let us know.


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