Film investment is only 10% profitable. The market is "deep water" and requires multiple means of risk control screening

The rapid growth in box office has attracted capital from all walks of life. Behind the temptation of huge profits, the extremely high investment risks have also forced many investors to face the end of losing their money. In fact, in China's film investment, 50% is losing money, 40% is flat, and only about 10% is profitable. High investment costs, few opportunities and high risks have become the characteristics of China's film market.

Original title: The popularity of film and television is the appearance of only 10% of the movie's money-making capital.

Although film and television investment is currently hot, the risks are very high. All participating capitals must strictly control the risks in order to enjoy the high returns it brings.

Although the number of cinema screens is still growing by more than 20 blocks per day, box office growth in the first half of this year has slowed down. According to statistics, as of June 30, the national movie box office in the first half of the year was 24.6 billion yuan, with 34.58 million performances and 723 million movie-goers. Compared with the same period last year, box office growth slowed down, with a growth rate of only 21%, hitting a new low in nearly five years.

"This shows a problem. The market will not be smooth sailing and rise unilaterally. At a certain stage, competition will intensify. There will be a process in which bad money drives out good money. Less professional investors will rely on resources to replace the good ones and use the fake ones to be real. But the public will not buy it." According to Xu Xiang, a senior cultural investor and general manager of Shenzhen Venture Capital Southwest Region, the current film market has begun to exceed demand.

Obviously, blindly following concepts to invest without grasping the operating rules of film and television and market resources will not only have a high failure rate, but also lose all money. To this end, the reporter interviewed market participants such as Xu Xiang, a participating investor in LeTV Pictures, Dong Yuanyuan, a senior film and television culture expert lawyer, and Jincheng Group, one of the producers of "Mermaid", to restore a true film and television investment context for readers.

The high-risk films are only 10%

. The rapid box office of films has provided the driving force for the development of films, and the swarming of capital has also expanded the scope of risk impact.

Behind the halo gathering and the temptation of huge profits, the extremely high investment risks have also forced many investors to face the end of losing their money. In fact, in China's film investment, 50% is losing money, 40% is flat, and only about 10% is profitable. High investment costs, few opportunities and high risks have become the characteristics of China's film market.

According to the reporter's understanding, only a very small number of films filmed can be released and even sold well. According to statistics from the Film Bureau of the State Administration of Radio, Film and Television, a total of 686 feature films and 51 animated films were produced in China in 2015, of which 47 were domestic films with box office exceeding 100 million. According to data from the "Movie Box Office" website, a total of 357 new films were released in 2015, including about 300 domestic films. In other words, less than half of the 686 films produced at a large amount of manpower, material and financial resources have entered theaters.

"The popularity of the film and television industry has directly attracted investors to invest funds. In addition to companies that have been in the film and television industry from the beginning, many traditional companies have currently transferred to the film and television industry. These funds will help the development of the film and television industry, but the film and television industry itself is very risky, so investors need to have a comprehensive understanding of the film and television companies or film and television projects to be invested in." Dong Yuanyuan, a partner at Beijing Tianchi Juntai Law Firm, director of the Policy Research Office of the Legal Committee of China TV Drama Production Industry Association, and director of the Legal Department of the Film and Television Finance Professional Committee of the Capital Financial Services Chamber of Commerce, told reporters.

Capital appetite for profit has increased.

In the eyes of professional investors, competition in the capital market has become more cruel. The success of "Crazy Stone" has inspired many people to go big with small things, and the failure of "Taiping Wheel" has also discouraged many investors from large-scale productions.

In Xu Xiang's view, the development process of the film and television industry is no different from that of other industries. "The market suddenly got better, and investment poured in. It became full of counterfeiting and shoddy goods, hurting the market, and then gradually declined, and finally returned to a normal and stable market."

According to surveys, traditional financial institutions are more inclined to debt investment, often through the loan model, which requires guarantees, mortgages, pledges and other methods to strictly control compliance; while private placement cooperation is often based on equity investment or equity investment, with high flexibility, high requirements for fund managers, and will be linked to industrial resources.

However, in the eyes of professionals, excluding formal financing channels, the profit-seeking of investing in film and television capital is not limited to the box office cake, but a greater money-making effect.

The concept of film and television has been hotly speculated in the primary and secondary markets. Film and television companies have begun to impact the capital market through IPOs, backdoors, mergers and acquisitions, etc. Listed companies have also put out huge fixed-increase plans to acquire the newly established star film and television companies at high premiums. This method was popular for a time, and the China Securities Regulatory Commission particularly increased its monitoring and restrictions on such behaviors in the first half of this year.

At the same time, in the name of financial innovation, they are hyping up stars and blockbuster resources. Mixed innovative financial companies have also begun to look for film and television resources to make money. They have established an image of "making money and investing" through box office fraud, and are playing a game similar to "Ponzi scheme" with the intention of making big money in the market circle.

Allowing unprofessional people to participate in professional financial investments is, from the perspective of the industry, a more gambling nature of this money. "People in the literary and artistic circles are actually relatively simple. They don't necessarily understand how deep the capital market is. They feel that if a boss invests, they can shoot. When encountering investors with ulterior motives, it not only harms the film, but also harms the mass base. Some big directors who make money are also avoiding this stage." Xu Xiang said.

Since multi-means risk control screening

is so difficult, can film and television investment not be done at all? Of course not.

It is reported that in order to control risks, Bank of Beijing usually conducts comprehensive discussions on films and TV series within the scope of "packaged" loans, selects films of different types, different schedules, and different costs to package them, and improves the "insurance factor" of the loan by spreading risks.

Similarly, Jincheng Group Cultural Fund also strictly requires risk diversification and invests in multiple different categories and models of projects. "The project is carefully selected and only invested in the top trading team in the industry; the entire process and all-round in-depth participation of the project is controlled; some projects adopt guaranteed income and structured design to prevent risks."

Ma Zhenguo, general manager of the trading department of Jincheng Cultural Development Group, said that the core thing comes from the management team's rich investment management experience and industry resources, so that risks can be controlled and benefits can be shared."Judging from the completed projects, some projects have achieved higher returns, and ordinary projects also achieve a return rate of 10%. We have in-depth participation in both the production and distribution stages of the project. When risks are expected, we will transfer our own resources first to maintain stable returns. During the operation process, there are also projects that are not ideal at the actual box office, but it is good for the release. The proceeds were realized in advance."

From a legal perspective, Yan Yuanyuan pointed out that although the risks of the film and television industry itself cannot be eliminated, matters such as copyright and investment income ratio can be clearly stipulated through joint investment contracts, and the quality of film and television projects 'scripts and creative team personnel can also be determined in the early stage. Composition choices reduce risks.

"The filming and release of film and television works is no longer just a small circle of directors, but a 'capital game' composed of film and television capital traders such as listed companies and fund companies. Really excellent projects are basically not open to individual investors, so individual investors generally participate through film and television funds, investing in high-quality teams, etc." Zhang Yaoting, deputy general manager of the wealth operation department of Jincheng Group, believes that for individual investors interested in participating in film and television investment, the first thing is to pay attention to risks, the second is to find strong partners, and the last is to pursue the best income-risk ratio and identify super IP with discerning eyes.

Editor: yvette