Lights, Camera, Returns: Investing in Film & Entertainment 1

Okay, I found it. Can you see A Daughter's Voice? Okay.

Oh, remember, we're not pitching it, we're just doing a case study.

Yes, ma'am. I just need to— okay, now I'm gonna go to stop sharing. Absolutely. And I've done this before as I've done different pitch taxes case studies, totally different ones.

Awesome.

Okay, we did it, and we did it by 9 o'clock.

Yes, we're good. Okay, so I I don't think I have to let participants in. I think they just are in. So I think we're going to go ahead and get started. It's 11:01. We're starting right on time. Pretty good. Pretty good. So this is my amazing partner, Ariel, and she is producing a movie that we're involved in together. And she's going to bring us the, like, open the curtain and go backstage into investing in film. All of the ins and outs of it. How is it amazing, how it can impact people with the message that it brings and how you can invest and invest with impact because at the end of the day, isn't that what we want to do? We want to have an impact on the world. So if you can invest and bring goodness in the, in the middle of it all, shouldn't we just do that? I just think it's a no-brainer. So I do love it. You're going to bring a case study for us today on—

I am.

Go ahead and tell us.

Well, I am so excited to be able to be here. Thank you so much for this invitation. First and foremost, Tracy, I am so excited, as you said, to share about the investment that you can have in a film because of the great impact that films can have on our society. And the impact that we have through these films is really what I want to call legacy. And that's what I really want to talk about. And how I want to talk about this is that as we're going through our portfolios, as we're looking at the ways that we can invest our money, there will different ways to look at it. It's like, what's going to produce the highest return today? What's going to produce the greatest long-term investment? And also, what type of impact are we making on society and on the future of our country, our world? Especially if you're like me and you're a mom. I have 3 children and they've gone into their 20s, and so they're young adults. And I'm thinking towards my future. I'm thinking towards my grandchildren. What world am I leaving for them? Not just a financial legacy, but the legacy of the world they're going to be inheriting. And so film gives us the opportunity to actually invest and to see a return in all three areas. And that's one of the reasons why I feel like it's such a viable option that people miss out on. And I do realize that there are definite Risks to every investment that we have, and not every investment is the slam dunk gold rush opportunity. But from my understanding and my experience in life, most, that is, that is with most, if not all investments. So I want to just give today an overall of how this works, what you want to look for to see that it is a good investment for your finances. And what are reasonable expectations for people? As they're looking at investing in a film. And then if there's any other questions, I would love for you to ask me those, Tracy, if I'm missing something. But I'd really like to do case study. And as I'm going throughout, I'm going to share as well, just historically, a little bit about Hollywood and how things have changed and particularly where we are in filmmaking. Most people, what I want to acknowledge, First and foremost is that most people, when they think of Hollywood, they think of the Oscars. So they think of those films that are up at the— get to go to the podium, or at least nominated for going to the podium. And that is really a fraction of the films that are out there in the world. There are hundreds of films that are made, and there are 20 that get acknowledged at the Oscars, maybe 30 if you're adding in documentary and all these other smaller not smaller, they're all big honors, but less known awards, right? So, but the film industry is way bigger than that. And if you look at it, the film industry has multiple platforms. We still are focused on the theaters. What has come out theatrically and made a big splash, right? And we hear big numbers, Avengers numbers, which are hundreds of thousands of dollars to make and billions coming in at the box office. And those are the things that we have in our head. But we need to scale that back and say, what is the, what is the average film? What is the broader base? And so we can always hit that big time with them, but studios are really only counting on and know that there's going to be a few every year from their studio. That's what they hope will hit that big time, that will go international, that will do all of those things. That doesn't mean that the little guys that are out there that are on, that we're watching on Netflix and Amazon and Hulu, on Angel Studios, videos are not making money. In fact, they are because there are multiple ways that they will make money. And so I want to just open with that to broaden everyone's thought process and recognize that I'm going to speak to you from the bigger picture, not necessarily a Broadway box office that we're used to. This is an industry and there's several different streams of income. That come in for a film. So what I'd like to do is share my screen, and I'm going to do this case study on an upcoming project. And this particular project is called A Daughter's Voice. So let me share that screen with you all. So you'll see that this is just a typical pitch deck, which you've probably seen for all kinds of different projects. But this is one that looks a little bit more for an investment for a film, and that's to help you be familiarized. So you open up, and unlike a lot of other pitch decks, This really has a sense of showing the creativity also of a project. What is it going to look like? What is it going to feel like? So there's pieces in here that I won't spend as much time on. I will look more at the business aspect of it with you for the interest of our time. But this is called A Daughter's Voice, and of course it gives you that opening statement: Across oceans and against the odds, she discovers love, purpose, and destiny, birthing a legacy that inspires women around the world. So this is an amazing story that is being told, and we want to know more about it. So here we go. We're telling about the tone, the genre. One of the things that you want to think about is when you look at a film is how popular is that genre. You can always look and do some research and see what is the base of people that watch that type of film. And so with this, it's a faith-based biographical inspirational drama. Dramas do well. Inspirational does very well. Right now, faith-based is really at its peak. Faith-based films are doing outstanding in the marketplace. If you do even the slightest bit of research and look at I Can Only Imagine and look at several different films that the Irwin Brothers have put out and the Kendrick Brothers and certain other filmmakers, Angel Studios, you'll see that they're doing excellent. In terms of their projects. Hollywood's trying to catch up right now. The percentage is not as high in the arena. So that's a great genre. I'm looking at it going, this is a great genre. And then you have biographical. This is a biographical. Now people love true stories, right? People love stories that they can't deny the truth of them. They can't deny the wonder of them. They can't deny what has happened. And so you want to look at that. What are the types of films? Then you— here's a summary. I'm not going to go into that really a whole lot, but this is a summary. A biographical, a woman who has started out in Hong Kong. Her story goes from Hong Kong to Mississippi to Virginia to New York to Belgium, back to the US. So she— it's a very— it's a story that takes you across continents. So you have a film summary, and now we're looking at target audiences. We want to have a broad base. You want to have a broad base for your film, but you want to also know exactly who the target audience is. If anyone ever says to you, my film is for everybody, you want to question that because everybody doesn't love every film. There is a driving force, and you should know as an investor that Moms are the biggest driving force in the economy. That's right, moms, we are the driving force. We go, we go with our husbands, we go with our children, we influence our friends that go with us. So you want to look at your target audience. These are more, as I said, just slides that will show you a little bit of a taste of what the project will look like. You'll see the visual styles of what this is going to be. It gives you a sense of the artistry. Of the project. And then you also look at who are the attachments, whether that's an outstanding director on this. Lisa Arnold is one of the top, if not the top female in the faith-based space who are featured actors. Just like if you were looking at oil, right? You want to see in the oil business, if you're going to drill in California, for instance, you want to see, okay, have these people drilled in California before? Who do they have on their team that knows what they're doing? Because I've never heard of oil wells in California, right? Whereas if you heard Oklahoma and you hear somebody, well, this guy's been doing it forever, it's the same thing. So with this is actually a project that is interested in not only showing in the United States, but abroad. And when you look at international, where would you go? You would take this to Asia, you take it to the Chinese market. So this is a featured actress. Who has an amazing background and connection both here in the United States and in China. So that would be a key player, a key role that makes sense for this particular project. So she might be someone who we'd say is, oh, she's well of oil. Same with cameo appearances that you have. For instance, you want to look at, again, sticking with the oil, you want to say, who's someone that people trust in the oil business?, right? Well, if you go to a faith-based film and you're looking at it, you might be— you might not look at it the same. Just as Lily Chen, who we just saw, might not be a name that is recognizable for the average person on the Oscars, who would Lily Chen be in the Asian community? Who is Lily Chen in the international community? We're looking again based on our audience, right? So Dr. Mark Yarborough And this is the 6th president of Dallas Theological Seminary. As the 6th president of the theological seminary, there are 18,000 graduates who are in some form of ministry, active in their faith around the country and the world. And they have followings that helps with bringing people to the theaters, that helps with denominations and ministries around the country and the world being interested in the project. So this one sweet man who seems like not a big deal in the oil business can be a very big deal if we have a faith-based film. So again, we're looking at this as investors, as projects that will be able to reach the audience that we want, that is going to drive the investment. Then we look at producers. So as you can see, I am a producer on this project. George Escobar, Lori Ann Beland. You would go through and look at what type of projects and what are these people known for. As you look at it, Joel Bankowski, Tracy Gore is involved with us on this project. We have filmmakers that are— have done these different types of projects. So as you go across, you see these are not people that are new to the— to this industry. In fact, as you look at and would look up these different projects, you'll see that these projects span for probably 3 decades and its team, different genres. They've been theatrically released. They've been on platforms that are new, old, and the newest platforms. These are projects that have— are very recent, and these are projects that have, again, great impact. And I want to bring that up because, again, what we're— there is that opportunity to say, gosh, these are all fun projects. These are all interesting projects. But as we go through, these are projects that can align with faith and family values. And so as we look at these different projects, it's like we look at this, The Last Appeal. This particular project was one that has reached, as of 5 or 7 years ago, 15 million people around the globe. These are other projects. Reconciled has been on the TBN app, which is reached— the TBN app actually reaches more devices, more people around the globe than any other platform. Christmas, each one of these, even the kids camp, all have a great message, something that you can stand behind, something that I am proud to have my children see, something that I say that if I was a part of or one of my team members are a part of, they contributed something very positively to the fabric of our society and our community. Cage No More was one of the first films really tackling the issue of human trafficking and an excellent film. Priceless, when it circled back and became something that was really on the minds of our country and came to the forefront. An excellent film with For King Country, one of the biggest Christian bands. Some of them tackling prejudice of faith in foreign lands and sharing it. And even Kids Who Flipped, which is one of the most recent projects, is right now on the Angel platform and very excited, opens today on that platform. And It is the first of its kind. It's watching kids flip houses and what they learn business-wise, but also growing in character as a person by the mentorship of someone who shares it from his life. So these are powerful projects that again, really share something important and meaningful for our projects. Let me move this. I'm, let me see. I'm not able to get across. I think. There we go. Comparables. So these are comparables. When you're investing and you're looking at film, you want to look at what is the budget of this project and what are comparable types of films and how have they done. So this gives you an idea when people say these, none of these are you going to see on the Oscars, but a $5 million budget that returns a almost $54 million return on Overcomer, the first one. I'd say that even if it's not Oscar-worthy, it's still investment-worthy. Um, if you look at the one, His Only Son, let's look at that for a minute. $100,000, and what return is that? That's pretty amazing when you look at those returns. War Room, a budget of $3 million, did $123 million. This is a faith and family project. These are projects that, again, have an impact on our society. That are speaking to an audience. So then we look at what impact we can make. Again, this is the faith and family space. So it's sharing faith. It's also looking at areas that can be, can be supportive of people's healing, of families' healing and growth and development. So some, we look at different ways that we can partner with different organizations and how we can address some of those, whether it's suicide, whether it's people in need of personal growth, support, healing. Anita Carmen's story lends itself to those things, to partnering with different organizations and agencies. Tax incentives. Now let's get down to some of the nitty-gritty here. In faith-based films, you have up to 31% that can be offered in incentives in the state of Texas. That is where this particular film is going to be. There are several states now that offer amazing incentive rebates that can be from 10 to 31%. Texas is at the top end. There are even some countries like Ireland that are super competitive right now. There is the Four Kings and Country's most recent project. Ben Smallbone is directing that. They— his son was actually on our most recent project and he is still there, uh, or just finished up, I think, in Ireland filming because the incentives are so great. There's a 20% base rebate in Texas. And if you look at that on a $3.5 million film, that's quite a bit of a return on your film from the very beginning. And then there's no sales tax and no field tax. Those taxes can add up. So when you look at that, you can look at an investment opportunity like this, and you're going to see the base breakdown. The base breakdown on an investment is what is stated here. You could put just about any film name in here. Now, of course, everything is negotiated. So I'm not going to promise you that every investment is a 20% return. There are those that someone goes in for 15 and maybe because someone has given the initial investment for development funds, they're going to get 2% more, or they're going to get some other specific payout for them for that initial investment. But this is very standard. So the investor in A Daughter's Voice, Tommy Dobczyk and many others will receive their investment plus a 20% return on their initial investment that's paid from the film's net profits after recoupment of marketing expenses. Marketing expenses do come out first, that is, and that is also an investment. You can invest in marketing after the film production is completed, particularly if it's an indie film. You can give investment into that. And I'll talk a little bit more specifically about that at the end so that there's no confusion. But for now, let's stay focused on there's a 20% return on the initial investment. And in addition, the investor receives the pro rata share of 50% of the film's net profits in perpetuity. So that is part of the legacy of the investment, that not only are we bringing something into the world, that can be forever. But as you go through, someone may give you an investment where you can make that 14% automatically in the first year, and you'll average maybe 12%, 10% over time for this. But with a film, you have your return as well for the rest of your life and the life of your children, grandchildren, great-grandchildren, and you have the influence of that from generation to generation. How many of us have watched— have watched a program every single year like It's a Wonderful Life? It's a Wonderful Life was made by Frank Capra decades ago, and it is as popular as ever. It is watched every single year on multiple platforms that people pay for, and there are still products online that you can Google to buy for It's a Wonderful Life because people buy it every year. And so if you can make a film that has that heart, that connection, you're going to have an incredible influence and financial investment. So as you look through this, it gives you the— again, there's more that you'll see that references some of the other things that we shared about distribution. Wait, let me just do this one stat back here, that 100 faith-based theatrical releases have earned $1.34 billion at North American box offices. So that's pretty good stat because every one of those films, of course, was not a big box office boom, but over time, that slow and steady, they've all made their money, and that's a good investment. So what you want to know is distribution. There are 5 different distribution channels that we can look at here very easily. First is box office. Everyone knows nationwide release, theatrical, limited, international, limited release. You can even have just weekend— you can do one or two weekend releases and then immediately put that on a streaming platform. And that streaming and licensing, whether that's Amazon Prime, Pureflix, Netflix, Angel Studios, ISME, these are all opportunities for streaming and licensing, whether that's subscription television, free television, which is actually advertised, that's AVOD. They're all platforms that again allow for additional income for that film. Church and conference screenings that are around the country that can happen. There's also educational distribution. Believe it or not, people still buy DVDs. People still buy the opportunity to have the film for life. And then ancillary revenue like soundtracks and other products that can come from it. And then additionally when we go through, you can see that a project can go through and develop their own plan. They can say, we're gonna do a film, the film incentive, then a pay-per-view premiere, then we'll go to Amazon, then we'll go to a megachurch movie night. These are just options that can allow you to see a plan of advertising, church showings, theatrical. How do we How do we create all of these opportunities or use all these opportunities? So this, just by chance, is the woman Anita Karman, amazing woman who reaches women around the world. And this is her adorable granddaughter in here. So I'm going to stop sharing and go back, okay, to you all. There we go. And I want to be able to answer any questions, Tracy, that I didn't cover in that. Really trying to stick to our timeline and open it up the floor. But these are— did say that I would give a little more about the marketing. And just in a quick 30 seconds, aside from being able to invest into a film and have the returns there, someone also can come in at the end, say you missed the opportunity to get into the film, and then you can come in at the marketing and say, well, we want to put a $2 million budget into getting this out into worldwide distribution. And with that worldwide distribution, what we're going to do is we're going to take that $2 million. We're going to partner with Angel Studios. We're going to have a big theatrical release and then end up on their platform. From that theatrical release, we've made the money back for the film. And the first money that gets paid is that marketing. Now, the difference in the investment is this: when you invest in marketing, you get your 20%— your investment and your 20% first, but you don't have a piece of the legacy pie. Your legacy is the impact, which is always amazing, but you do not have that continued return. So that's the two different types of investments that you can have in a film.

So a couple of questions come to mind, speaking like from an investor point of view, is how can you get exposed to these types of investment opportunities? And what is the initial turnaround usually from when you invest to when the movie's made to when you actually start seeing any return?

Well, working backwards, I think with a film, you have to know that you make an investment in the film and then the film has to be made. So the reality is that depending upon the film is how long it's made, how long it takes. That a film generally takes from, I would say on average, from 4 weeks 2, it could be 6 months to be made if it's a blockbuster film. Okay. Most films don't take those 6 months. It's the blockbuster sweeping films. And with some of the VFX and AI that has become available, it also cuts that down as well. But I would say a film like this that I just shared, it would take 5 weeks to make. Now, prior to that, there's pre-production and most films need at least 2 months for that pre-production. And the reality is they've been doing a lot of things prior to that. You have to find the right cast. You pull your team together. A lot of the team and the crew is a lot easier, but securing locations and venues. So from the time that you make the investment to the time that the film is made, then the film being post-production goes into refining the editing process. The colorization, all of those things, and then goes out into the theaters. I would say to most people that they should count on a minimum of 18 months to— before a film would actually be released. And that's because every film, the films that do really well, there is a patience involved in this because you want to be marketing your film, especially if it's a theatrical release, about films coming out a long time before. Not every film needs that, but we want 6 to 9 months to at least be marketing and sharing that with people. So again, that's a fast turnaround is 18 months unless it's a direct-to-platform. So it is, it's something that an investor, again, you have to realize that sometimes there is something to the all good things take time.

So, and it's a long-term goal, not a get rich quick.

It is, it is, but it can be also a very exciting process. Investors can have the experience and the opportunity to come on set to see what's happening, to follow that process and be a part of it, to be at the premieres, and also to see the impact along the way, to go to the previews that happen, because we generally— you'll go out and you'll have different previews to see how people are responding. So it's a personality that you have to have to have that patience, to enjoy the process and to know that there's going to be a great return for that patience.

So how do people get exposed to these types of opportunities?

Well, getting exposed to these type of opportunities is one where you have to— a lot of people say you have to know somebody, but if somebody like you, Tracy, who knows about this and asking your— asking those that are in your circle that are giving you opportunities for investments, for brokers, those things. You can talk to them. You also can look in the— on platforms that are looking for angel investors, those things. On LinkedIn, there are different film groups that you can be a part of. If you go on to LinkedIn and you see what are the opportunities for film investment, film investment groups, or filmmakers, you can go on to LinkedIn and look up filmmakers. You can also find what are some of the films that you think are excellent films and you can follow those individuals. You can start researching what do those individuals have happening and contact as well. So these are all ways that you can find out about upcoming projects that are available.

That sounds awesome. It is exciting. And this is my first film project at all to be involved with. And so it is very exciting and it's very honoring to be a part of something so magical. So I really appreciate your time today. You have promised and delivered exactly what we needed to hear today about understanding film and investing and what's important to look for. And I really appreciate you. Thank you so much.

Thank you, Tracy. It's been just a joy to be here with you.

Okay, we'll see you later.

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