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Invest in Horror, Or Not Invest?

Posted July 21, 2013 by Stuart Wells in Articles
paranormal-activity

The film industry is undoubtedly an exciting and interesting investment opportunity but the unwary can very easily lose their shirt. For every film that makes big bucks there are hundreds that lose money. Investments can generate returns of up to 100% within the first three years, residual income can continue for decades: royalties and income from DVD, soundtracks, streaming, cable, pay per view, the list goes on. So should we invest in horror or other films?

Invest in Horror?

How can we successfully invest in films? The two highest performing genres at the box office based on returns are documentaries and, you guessed it, horror. In a study of films released between 1995 and 2011 the average return on horror films released theatrically was 140%. Of course this average is skewed by some particularly high returns on a couple of films: Paranormal Activity cost $15,000 and generated $194 million worldwide. Horror is also an exciting and varied genre to get involved with now the popularity of torture porn has subsided. Creative film makers can leverage horror and make entertaining and profitable cross-over films such as Shaun of the Dead.

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Always look for interesting projects, run them passed your friends. Don’t rely on gut, the strength of the cast/ crew or the script. Do rely on a solid business plan that has an awareness of tax credits and film distribution channels. Always ask how and when you will get your return.

Great horror films can be made on very low budgets: invariably they feature unknown casts, are shot using cheap digital cameras. Relying on clever film making to deliver the thrills rather than big budget CG. If, and this is a big if, the film you have backed gets picked up by international distribution then you could score big. But don’t be disheartened if it doesn’t the film industry is changing there are new distribution channels, such as chill, that are democratising access to a paying public . These new channels enable enterprising film makers to engage directly with the audience and generate returns without ever gaining theatrical distribution. Always query how clued up any producer is on these new channels and whether they see the value of social media. And never invest more than you are prepared to lose.

How do we do it?

This will be the focus of several upcoming articles.


About the Author

Stuart Wells