Risk Management and the Evaluation of Entertainment Investment Projects

Résumé du livre

Americans personal expenditures on leisure and recreation activities increased 578 percent from 1970 to 1988, a number not lost on investors in the entertainment industry. The entertainment industry is generally affected by the same profitability factors as other industries. However, due to its unique nature, movie production costs cannot be limited to one type of capital investment need. The production, distribution and marketing of a feature film project require a large capital investment with the average cost of producing a feature film from a major studio having a price tag of $18.1 million in 1988, up from an average cost of $1.5 million in 1970. Using the guidelines proposed in this article, investors can assess the value and the risk of investing in the filmed entertainment industry projects. Diversification in the types of entertainment invested in is the best option for a sound, profitable portfolio.