When done correctly, a motion picture investment is less risky for
investors than a dotcom, bio-tech, or high-tech investment. More
money has been lost by investors investing in dotcom, bio-tech, and
high-tech investments than has ever been lost by investing in
domestic motion pictures.
The three keys in reducing the risk of a film investment to less
than twenty percent is to first invest in development funding of
motion pictures and not invest in their production funding. Second,
to make sure the film has a major US distributor before the movie is
made. Third, motion pictures have multiple streams of revenue for
each film which lowers the risk and increases the profits to
investors unlike other investments that do not have those additional
A motion picture development fund is very much like a real estate
feasibility study conducted by a real estate developer to determine
the merits of proceeding with a proposed real estate venture. If the
venture pencils out the developer will then proceed with the
project. If it does not pencil out, then the real estate developer
will drop development of that project and move on to develop some
other real estate project that does show potential profits.
We do exactly the same thing with a film development company. We
develop several film projects of which only the best three are put
into production and distribution. If a prospective film investor
understands a real estate investment then they most certainly will
understand how a film development company operates.
TARGET: TO PRODUCE
THREE MOTION PICTURES RELEASED BY MAJOR HOLLYWOOD STUDIOS THAT
MAXIMIZE RETURN ON INVESTMENT
To form a writer centric film development company comprised
writers from Seattle and Los Angeles.
To produce three audience driven films budgeted at $20 million
$40 million dollars distributed globally.
To finance these films through Los Angeles entertainment bank
fully guaranteed by foreign presales.
To maximize film profits and build audience awareness by hiring
directors, actors, and actresses.
To recoup 120% of the investors investment within two years
the films are all made or distributed.
To thereafter split profits from all revenue streams 50/50
investors and exit the investment in 3 to 5 years.
The eight major Hollywood film studios are: 20th Century Fox,
Universal, Disney, Paramount, Sony (Columbia), Warner Bros.(New Line
Cinema), MGM/UA, and Dreamworks SKG. They all have an insatiable
appetite for acquiring and distributing motion pictures. Their films
are very costly to produce, (eighty million to two hundred fifty
million dollars), and market (twenty-five million to seventy five
million dollars). They can no longer develop in-house enough quality
movies with mid-range budgets to feed their “distribution pipeline”
for theaters, cable, and video/dvd. They now look more to outside
independent companies to supplement the development and production
of their movies. Currently, twenty percent of Universal studio’s
releases are developed in-house while the remaining eighty percent
are picked up from independent production companies.
Seattle Film Group LLC will help ease the studios pain by jointly
creating with local investors Seattle Film Development One LLC to
develop audience driven motion pictures utilizing High Definition
24P Digital Cinema at considerable cost savings over traditional
studio film budgets. The company’s business is to supply quality
films to the major studios and engage in co-ventures with the most
successful independent production companies.
Fundamental to this plan is creating a writer centric development
company comprised of top writers who possess great talent and
excellent execution skills. These in-house writers will be involved
in each project developed. This is not common in the film industry,
but it is the established basis for the television industry. By
devising an environment in which creativity can flourish within
well-managed operational constraints Seattle Film Group LLC can
successfully deliver higher quality films to the major studios.
The riskiest way to invest in feature films is to first fund the
production of an individual movie, then submit the finished film to
a major distributor and hope they like it enough to release the
movie. The risks are unacceptable with that all too often used
method. The safest way, which reduces investors’ risk to less than
20% (twenty percent) and is used by the most successful major
independent film companies, is to invest in a film development
company creating multiple pictures financed by Los Angeles
entertainment banks. A completion bond company insures these bank
loans. The production loans are also fully collateralized by foreign
distributor presale guarantees and licensing rights with a major
domestic cable company (HBO/Cinemax, Showtime, and Starz/Encore).
The development company works closely with the eight major U.S.
studios and the top seven foreign territory distributors (United
Kingdom, France, Spain, Germany, Italy, Australia, and Japan) in
developing these movies. This creates a business collaboration that
assures each picture's maturing in the major global markets over
several months preceding its production, and just as important
almost guarantees each film the major distribution that is so
essential for profitability.
Seattle Film Group LLC and the up to five active accredited
investors will equally own (50/50) Seattle Film Development One LLC.
The same executives and personnel at Seattle Film Group LLC will
operate both companies.
The investment in this writer centric development company, Seattle
Film Development One LLC, is $9,000,000 divided into twenty units of
$450,000 for three films. The minimum purchase per investor is four
units, or, $1,800,000. This funding will last approximately five
years. The up to five active accredited investors receive:
50% (fifty percent) ownership of the development company – Seattle
Film Development One LLC
100% (one hundred percent) of the gross cash receipts received by
Seattle Film Development One LLC paid to the investors until they
have recouped 120% of their original investment, $10,800,000, from the
licensing of the three motion pictures worldwide. This milestone is
typically reached by the second year from full subscription of the
Thereafter, investors will participate 50/50 in all gross cash
receipts returned to the company from each of the three motion
pictures released in all media both domestic and foreign. These
multiple revenue streams include: theaters, video-on-demand, video-DVD,
pay-per-view, pay cable, satellite, TV network, syndication,
video/computer games, music, publishing, and merchandising, etc.,
The $9,000,000 raised will fund development of several potential
projects of which the best three are “greenlighted” and financed by
Los Angeles entertainment banks for $20 million to $40 million each.
This leveraged amount totals between $60 million to $120 million in
actual production value. These loans are fully guaranteed by foreign
distributor pre-sale and domestic pay cable contracts
Other investments, such as biotech, high-tech, and dotcoms,
frequently rely on an exit strategy of Initial Public Offering, or
Merger & Acquisition, to generate a return on investment. Often this
can take five to seven or more years to execute. Unlike them,
Seattle Film Group’s plan is NO IPO, or M & A, but instead to create
positive cash flow incoming to the active accredited investors
during the course of globally releasing three motion pictures over
three years or less. Profits earned will continue to flow to
investors for several more years from successful films. Upon
completion of these three films the investors are done. Seattle Film
Group LLC will then initiate Seattle Film Development Two LLC and
interested active accredited investors from the first development
company may return and reinvest in the second development company.
Subsequent development companies will create from three to seven
The key financial objective is market performance in all media. The
company’s goal is to return a minimum of five times the investment to these
active accredited investors. The lifespan for this development
company’s active activity is projected to be three to five years.
STATUS: Seattle Film Group LLC has the majority of the
management and development team in position ready to begin
operations pending funding of the development company. Other team
members and staff as outlined in the business plan will be brought
aboard once full operations commence.
ACTION: For the reader to elect whether or not this venture
is one he/she wishes to study in more detail. To do so please contact George J. Ladas - President, Seattle Film
Group LLC at 206-282-1057, cell 206-369-0749, or e-mail
GeorgeL@seattlefilmgroup.com to request a password for client
login to download a PDF file of the business plan.