The allure of Hollywood brings with it visions of posh parties, hobnobbing with the rich and famous, awards shows, and dressing up to the nines. There used to be a time when only powerful entertainment moguls could put their money into movie-making ventures, but not anymore. Indeed, there may be a way for you to get in on the action and invest in the potential success, or failure, of movies.

The very first thing you need to know about investing in movies is that it is very risky and comes with a strong possibility you will lose your money. ROI is usually not the driving incentive behind a film investment. Your reasons for investing in films may include a passion for the project’s message, tax deductions, and the perks of walking a red carpet, getting a producer credit, or attending a film festival. Do not invest in any film if you cannot afford to lose your entire investment.

Why invest in movies?

Pixabay/ Pexels | The primary reason to invest in films, which is true for just about any investment, is the potential for a lucrative payout and strong ROI

Investing in movies can be lucrative, and the rewards reach beyond just ticket purchases. DVDs, Blu-Ray DVDs, audio cassette sales, VOD subscription sales, deals with streaming services, and the sale of merchandise can count towards the revenue that movies make and will likely generate revenue throughout the entire cycle.

Moreover, investing in the film industry means investing in a creative pursuit. This can be rewarding artistically, whether you’re investing in an independent film or a Hollywood blockbuster. Making a movie investment means supporting artists to create work and seeking a return on money invested.

It can be a win-win in this regard, supporting a film project at the same time as seeking a return on capital. It can be a challenging but fulfilling journey as well as a method of portfolio diversification for the already sophisticated investor. Film investment has been a tried and tested method of investment since the dawn of cinema.

What do you need to become a movie investor?

Filmposal/ Getty Images | Investing directly in a movie might sound flashy, but it can actually be a complicated and risky endeavor

Becoming a movie investor isn’t a hard process. The biggest thing that you need is money. You will want to have enough money to have some leftover after your investment. It is never a good idea to put all your money into one investment. Most movie investments are from several hundred thousand dollars to upwards of a million dollars depending on the person investing and the requirements of the movie.

It isn’t required, but it helps if you understand how a movie is produced and what an audience is looking for in a movie. This helps you better judge whether a film will make it or not. Information on movie production can be learned for free, though.

The bottom line

Filmposal/ Getty Images | A lot of people believe that movie investment isn’t logical

On its own, film investing appears to be an asset class unto itself, uncorrelated to the other types of investments. Movies are somewhat recession-resistant because even in hard times, people still need quality entertainment. so they will not stop going to the movies or streaming them online.

James Wiley