The profitability of most projects is directly related to the project, its genre, talent, distribution options, and a balanced financial plan.
While there may be some investors who do not finance films with the goal of generating profits and are merely looking to enjoy Hollywood perks - such as visiting a film set, meeting a-level actors and directors, and celebrating at glamorous red-carpet events - most investors who appreciate these perks, also appreciate a good return on their investment.
Enjoying the Hollywood perks and generating profits can both be accomplished if producers and investors apply strict investment criteria when financing films.
These investment criteria include:
Investing in projects with feasible budgets, supported through distribution revenue projections issued by bankable sales agents
Verified market demand for a project established through presale distribution agreements in support of the projections issued by a bankable sales agent
A balanced financial plan that includes presale financing, non-recoupable finance elements such as production incentives, a leveraged equity investment in support of IP ownership, and a meaningful premium and profit participation component
Approval rights for all financial and distribution-related agreements, as well as project changes that could negatively affect the film's profitability
Confirming distribution through bankable sales agents and distributors
Production insurance to protect the investment
Revenue protection and transparent accounting/financial reporting through escrow agents
Investors would ideally confirm the feasibility of a project and evaluate all risk mitigation options before investing in a film or television project.