We are in the midst of an independent revolution. The industry is shifting in favor of independent producers and financiers. Here are a few interesting trends we have witnessed.
There is a growing trend in the industry to make films based on real-life events and people. This trend is particularly prevalent in indie films, which accounts for the disparity in the number of films released vs the share of the US box office.
Part of this is likely due to the open nature of the story rights for public and historical figures that has opened new doors in IP for independent filmmakers.
The interest in horror movies has been strong since the beginning of cinema. The productions lend themselves to lower budgets and the thrill-factor plus natural word of mouth has proven to create a lucrative business in terror that isn’t showing any signs of slowing down.
Story-wise, horror films are on a downward slope in the “gory and disturbing” and are moving toward “thoughtful and serious” and “paranormal”.
Either way, horror remains to be one of the safer bets in the industry.
Faith-based films have proven to be hugely profitable, despite a lack of “mainstream appeal”.
The big film to point to in this arena is The Passion of the Christ, which grossed $612 million on a $30 million dollar budget. But, The Passion isn’t alone in this growing niche.
There has been a stream of profitable Christian films gracing the box office and VOD platforms – earning hearty returns even though critics and the general public tend to shy away.
Digital revenue has now surpassed revenue from physical products.
It may shock some of you that people still buy physical DVDs and BluRay Discs to watch movies, but they do!
However, that revenue stream has been steadily declining since the disruptive platforms like Netflix, Amazon Prime, and iTunes have put a crater in the industry’s business model.
And now, filmmakers are seeing higher performance online than in-stores.
The numbers have shown a decline in the average budgets of some genres – particularly: Romance, Horror, Thriller, Biography, and Drama.
This is, in part, due to the increased accessibility of filmmaking when the industry was once elusive and exclusive.
And, due to an overabundance of massive tent-pole films, audiences are currently drawn to smaller films, and the phrase “less is more” is becoming increasingly true when talking about the nature of certain genres.
According to a study done for the American Film Market, the films that are the most profitable in the $500K – $3M range are extreme – clear concept horror films, documentaries with built in audiences and/or powerful stories, validating feel-good Religious films, and very high quality dramas
Takeaways from the study show that some “niche” audiences are large enough to make for a very profitable market. If you are aiming for a more “general” audience, quality matters a lot. And, looking for great actors instead of “big names” is the way to go.
Many people think that the celebrity status of your main cast is the most deciding factor when approaching the idea of the bankability of a film.
However, the numbers will show you that in fact, things like Fame of the Cast, Director’s Track Record, and Producer’s Track Record are on the lower end of importance compared to things like Story, Script,Acting Ability, Marketing Materials, and Cinematography.
The new Section 181 Deduction under the Tax Cuts and Jobs Act of 2018 (TCJA) creates a 100% deduction for any money invested in a film or television series that is produced in the United States and that qualifies under the original qualification standards of Section 181.*
What does a 100% tax deduction mean for a film or television investor? It means that for every $1 that a high net worth investor invests in a film or television series, the investor can write off 37 cents from that investor’s tax return. That is a tremendous incentive to invest in a film or television project when more than a third of the investment can be written off.
*Be sure to contact your tax accountant to see if you qualify and Section 181 will benefit you.