As you may be aware, China’s box office and gaming sectors are game-changers for Australia’s film and creative content industry.
Below, I outline what investors want, announce a revised film investment event, and provide more information about myself, (as I am not known in your film industry circles.)
What investors want…and who are they?
Film and screen content could be a new niche investment sector given that:
- China has doubled the film and gaming market that is accessible to Australia
- technology has made content creation cheaper and sharper for more producers, with wider distribution channels and
- Australia’s film industry has the potential skill set to make films that can appeal to both the Chinese and Western market (due to Australia’s existing creative talent increasingly aware of the Chinese market, more Asia-centric new talent coming up the ranks, and the Aus-China co-production treaty).
Investors are also seeking ‘non-correlated’ investments…on the basis that stocks, bonds, property and private equity/ VC could be near peak valuation, while film returns do not move in tandem with these other investment sectors.
They also seek risk mitigation such as diversification, operational/regulatory/production ‘certainty’ and other solutions which I will discuss at my event and film industry report.
Importantly, they seek a return on investment (ROI) commensurate with the risks they are taking. Fortunately, there exists an investment model for this already being the VC fund model. For example, where there are 10 underlying investee projects, one will be 10 x ROI, one or two will have a satisfactory ROI and seven to eight will be mediocre or loss-making…with the expectation that a better skilled investment team can improve on these odds).
However there are challenges in appealing to a wider universe of investors. There needs to be:
- More transparency of P&L returns from the film industry
- Wider distribution channels, (which is growing e.g. internet streaming, VOD, more theatres in China, etc.)
- Additional revenue sources within a film project (product placement, monetising the interplay between gaming and film, monetising of new celebrity status especially within China including merchandising)
- The opportunity for tech disruption /adoption e.g. VR, 360 film, CGI, VFX to lower costs or enhance the story or create new audiences
- More film projects (so investors have a wide selection to choose from…and when I write ‘film’, I mean all screen content including TV dramas, reality shows, animations and gaming)
- The creation of more film investment funds that have industry expertise. These film funds are the conduit for Australian and Chinese high-net-worth investors to allocate a percentage of their investments into films. These funds add a layer of operational expertise, diversification of film projects, a layer of regulatory oversight (i.e. ASIC regulated funds) and an established channel of investment advisors to explain and market the risk/reward profile of such funds to investors
- Return on investment (or expected ROI) needs to be demonstrated with a track record…or at least a demonstration of superior skill set in selecting films
- Ways to manage risks in navigating China’s regulatory, distribution censorship, cultural, copyright and business practices
- ‘Skin in the game’ from producers in sharing the risks of the project (e.g. below market salary with larger profit share i.e. ‘sweat equity’…as this is common for other VC deals)
- However there can be permutations to the above because this is an investment in ‘art’ vs the ‘science’ that applies to most other asset classes
Who are these investors?
In my discussions with a pool of possible investors, there are a range of investor types…including Chinese-Australian investors who see the China game-changing potential, VC funds seeking new products (especially for their Chinese Significant Investor Visa (SIV) program clients), Australian private investors interested in riding the ‘tail-wind’ of the Chinese mass consumption story, and high-net-worth investors investing for passion or bragging rights (a small but potent group) and business people who invest and use the content to further their own corporate objectives.. More discussion on these investors at my event.
A related issue is the reliance by Australian film producers on government funding support …is this hampering or enhancing the long term (commercialisation) of the film industry? i.e. Are there consequences for the Australian cultural/artistic merits sought by Screen Australia, when hard-nosed ROI-focused investors are interested but want change in what and how films are made…. Hence the question…are the ‘barbarians at the gates’? (Google this for background if you are not familiar with the term.)
Change in my Aus-China Film Investment Conference
Feedback from investors indicates they prefer a shorter event to get the ‘big picture’ of the opportunities, and risks from a ‘game-changed’ film industry due to the China factor …and that they will follow up on a 1-1 …or 1-small group… basis if they want to pursue investments or have further discussions.
However, they are keen on networking at the event as they want to hear from industry players about the potential for film investment.
As for speakers, I have reduced the number due to the shorter time horizon. I recognise there are many experienced film industry participants with their unique insights on this new opportunity; hence I have included a 1.5 hour networking session after the event.
I am expecting only 30 investors now (instead of 50 -60) so I need to drop the event size to accommodate a ratio of ‘buy-side’ (investors), sell side (producers), and industry service providers to around 1/3 each group. (i.e. I don’t want 30 investors and 170 producers/service providers as its too unbalanced).
As a result, the fee to attend has been reduced substantially. Click here for details
I will market the event to my 12,000 database as well as an 800 strong film investment database in Australia that I have assembled in recent months. The event is sponsored by HLB Mann Judd, an award winning accounting and advisory firm with strong affiliation with the US film industry.
By way of background, I have a 30+ year career in finance and research, and on a personal level, am semi-retired with a philosophy that a modest life is good enough for me. (Read my Aussie fisherman and Chinese banker parable http://basispoint.com.au/the-chinese-banker-and-the-australian-fisherman/)
Creating new investment communities is a challenge I enjoy. I was involved in the creation of futures and derivatives funds that eventually morphed into hedge funds, when I was head of marketing at the Sydney Futures Exchange and more recently, created new communities involved in the Significant Investor Visa program, and the Australia-China property developers sector.
I am independent with no conflict of interest in that I don’t represent any particular business (apart from my dream to have my fantasy novel be made into a movie and game one day!) My father always chides me…that I am ‘the person digging the well for other people to drink!’ It’s an old Chinese saying that means that I am not maximising my returns for the effort I make… and worse, other people are getting the benefit of my efforts!
I look forward to meeting you at the event.