© Copyright 2002 Stan Williams
Dr. Stan Williams is Executive Producer and Managing Director for SWC Films, an independent feature film development company seeking investment partners. His website is www.StanWilliams.com and he can be reached at Stan@StanWilliams.com.
An Oxymoron
For some investors, however, the phrase “motion picture investment” is an oxymoron. It is well known that most motion pictures lose a lot of money. Yet as a whole, the film and entertainment industry grows, especially in comparison to the cyclical nature of many traditional blue chip business sectors like energy and transportation. In fact, despite rising ticket prices and a slumping economy, the 2001 domestic motion picture box office revenue hit an all time high for the 8th year in a row, exceeding $8.1 billion. It is also obvious from recent million dollar book deals that major studios and established independent producers appear to be financially robust, even as we read that their recent pictures lost tens-of-millions of dollars.
How can that be? What don't we understand here? Let me try to explain.
The success formula for a motion picture company is really not that much different from any other business. The president of a well-run business or the producer of a motion picture company must be a student of: (1) good business practices, (2) market gap analysis, (3) product quality, and (4) distribution. But most motion picture producers disregard one or all of these elementary business requirements. Further confusing an accurate view of a film's revenue is (5) the popular press' incomplete business reporting.
