This document provides advice for potential investors in movie production. It emphasizes that investing in movies carries significant risk and should only be done with money one can afford to lose. It recommends investors educate themselves on the movie business, find filmmakers with good story ideas and passion for their projects, and ensure proper accounting and oversight of funds. Overall, the document frames movie production as a business that requires understanding risks and having appropriate funds to see projects through to completion and distribution.

1. Should you Invest in Movies?
Before going any further, let it be known to the person or persons who
are the would be funders or investors of any movie or showbiz
venture. By NO MEANS, (as in any investment venture) invest in a
movie if your funding comes from the following, your son or daughters
college fund, your retirement fund, your 401k, or your savings for in
ANY VENTURE you can lose it all. Any funds that you give and worry
about losing cause its your nest egg, isn’t worth losing sleep over at
night, do not invest those particular funds in a movie venture or any
venture for that matter. For taking on any investment venture comes
the responsibility of knowing and having the right kinds of funds
(money you stand to lose). For the very definition of venture itself
means, “a risky or daring journey or undertaking.“ For a true
INVESTOR is an investor who KNOWS the RISKS, and most
importantly the GAMBLE. Most importantly, enjoy reading, like, love
and be enthusiastic about what your investing in.
Investing in movies is not for the “faint of heart“. You must partly be a
person who loves movies, is willing to read a script and at least like or
love the story, is a visionary and is a dreamer, you don’t have to be a
storyteller, leave it up to the storytellers, “the filmmakers“. These are
the ingredients to being a successful investor in making movies, good
story and a good gut feeling. For the same reasons, that the football
team owner, owns the football team but lets the coach run the team.
Your funding should be like that 5,000 or 200,000 dollars you take
with you on a trip to Las Vegas, knowing you may possibly lose it all,
and if by chance you do, you won’t even miss it because you knew the
risks and the gamble. But in the real world this is true of any
investment. Putting money in movies (like any other INVESTMENT) IS
a RISK. But there are upsides to being involved in the movies. As long
as (you) the investor sees that every receipt for the money you
invested has receipts backing up every last dime spent (the accounting
reports of the film) do this. Then you should be assured that a movie
was prepared, made and distributed.
NOTE: Any Investor funding a film must also earn his or her stripes
when it comes to obtaining a Bankable Star or as Hollywood calls
them, A-Listers. You must have a history of funding movies in order for
the Bankable Star to be comfortable that you know the risks and will
not pull out your funds during the start or middle of a production.

2. Making Movies is like building a Building
FIRST, YOU the business man, must understand this, and understand it
well. YES! Making movies IS a BUSINESS. It involves budgets,
receipts, invoices, payroll, banks, a location for business and yes
people have gone to college and have earned BA’s and MBA’s to get
into this business of making movies. So YOU the business man, must
take it serious. When getting to know Producers who are looking for
you to invest in their film, its important to know, if the producers get
along well (no need for marriage break ups during productions). That
the script you read does not deviate from the story line that made it a
good script. That the production company has a TAX ID and a bank
account set up for escrow until you the investor know that all the
details are taken care of, that you are insured daily reports and emails
sending you the status and progress of the production shoot.
What do you look for in a filmmaker? Educate yourself, even if it’s a
little ounce of education.
1, he has a great script (a story you like and that you have a gut
feeling can make money at the box office), 2, the filmmakers have a
demo real, and have produced images that move you. 3, the
filmmakers don’t take cheap shots (watch: Ed Wood the movie and
Heart of Darkness: A Filmmakers Apocalypse) you will know the
difference in filmmakers and what you as an investor are looking for in
a filmmaker.
Understand this, that you will not find a filmmaker that has a long
track record of profitable movies. LOL! That’s like wanting to get a free
ride. Or putting the carriage before the horse. Looking to buy into
something that’s already successful. Otherwise the filmmaker wouldn’t
need you the investor. The filmmaker would rather deal with the
investor who put money on him when he had no track record and yet
the investor believed in him. You are building. When the corporations
bought the aging studios back in the 60’s, the studios hired the film
students who had no profitable track records. Among these students,
Coppola, Lucas, Spielberg, Scorsese and Terrence Malik. The studios
were re-invented and rebuilt with the MINDS of these visionary
filmmakers.
Making Movies IS a Big Expense
Movies are expensive to make. If you cant stand the heat, stay out of
the kitchen. No Guts no Glory. Perhaps you have heard these famous

3. quotes before. An acceptable amount to build your business is 100,000
to 1,000,000. One hundred thousand has you being frugal, cutting out
things you don’t need for now, but eventually will, by thinking it this
way, you saying, “maybe we can get that when the first orders come
in”. But what if they don’t? Still you proceed with your LOW BUDGET in
building your business. You may be in the business of making boxes,
people need boxes. It may be technology, people need tech support
and technical parts. It may be selling cookies or cooking food, after-all,
people do eat. Some people eat out everyday. Or it may even be,
building a film, people do like to be entertained. Even during times of
economical depression people run to the theaters to escape the real
world. But if you’re a real business man. Then you know the movie
business is no different from all those other businesses mentioned.
A script is written and everything in the script is broken down, from
props, lighting, visual effects, locations, man power needed, make-up
and effects make-up needs, costumes, sets built, stunts, number of
permits needed, number of main characters for lead roles, number of
extras needed to fill in the background, cars used, songs you need to
license, etc, etc, etc. Then you have the script all broken down and
from it comes the budget. Who is best for the job at the right price.
Who is creative? Who’s the right actors for the leads? Whose the
director with the right vision? Choosing a Production Designer with the
right vision. Then you put a package together along with budget sheet
and present it to Investors. If funded then project is GREENLIGHT.
(NOTE: If there are more than 1 investor, and that investor did not
invest the entire amount. Then the investors funds are deposited into
an ESCROW ACCOUNT that the Producers cannot use until the entire
budget has been funded for the building of a project or film. If the
Investor says, he wants to wait till other Investors place money, note
to filmmaker, MOVE ON and do not let that investor participate for he
is already nervous and walking on shaky foundations within himself.
For his money is guaranteed not to be touched and is protected by the
bank, which if the film is not funded, the bank will release the funds
back to the Investor. If the investor does not understand the term
ESCROW, he is not a knowledgable Investor. Seek another Investor.)
PRE-PRODUCTION
The funds are in and released. Bank is open for business, office is
acquired, systems are set up to begin tracking every penny spent.
Development begins, hiring begins, auditions, sets built, permits
acquired, key positions filled, insurance bought for the duration of the

4. production, contracts made, equipment either bought or rented. A
shooting date is set.
PRODUCTION
First day of shooting to the last day of shooting. Trucks and equipment
arrive on location. Catering is set up to make sure everyone is fed.
Leads arrive - from Cinematographer, Light Grip, Production Designer,
Set Decorator, Make-up and FX Make-Up people, Costumer/Wardrobe
arrive and begin to fit the actors or clothe them from their arsenal of
clothes closets, Effects crew, Stunt Coordinator, Props-man. Whatever
the calls are for the shots of the day everyone reports for duty.
Producers are making notes, making sure that the important
paperwork is always available (permits for location, insurance and
notices for employees) checking budgets, checking and saving
invoices, meeting with “assistants to the producers” to make sure all
points and details are covered on the finance and business side of the
production and that all the necessary paperwork get input into
computer files on the production and most importantly staying within
budget and on schedule.
Director and his assistant directors arrive, blocking a scene begins,
light schemes, camera angles, are worked out between Director and
Cinematographer and Light Grip, rehearsals between Director and
actors, if a line on the script doesn’t work, the Director is working with
the screenwriter to write lines that will work with the scene of the day
or maybe an entire scene has to be rewritten.
Editing is occurring as the film is shot each day as the film is pieced
together as best can be done, so that editing can be completed as the
film wraps up and production is completed. Now on to Post.
POST-PRODUCTION
The film is shot, so now the second part of the magic begins. The
action was captured, the dramatic acting by the actors captured, the
sound recorded, certain scenes green-screened for background Visual
Effects for Post. How does the second part of the magic begin?
The lighting and color are enhanced and corrected on computers. The
Sound editing and sound effects of actors talking, the sound of a
gunblast or a beast growling is enhanced and made more intense.
Dolby Digital sound is coated to all movie tracks on the film to give it

5. an intense realistic sound. Credits are added and the film is NOW a
done and completed film.
A Radical, Up-side View
A movie is the best investment one can make for the up-side potential
vs. the risk. They're better than real estate, blue chip stocks, gold,
silver, precious stones, income-producing rental properties, futures,
and treasuries . . . better than anything, with the possible exception of
investing in your own education and spiritual enlightenment. There
simply is no business with manufacturing capital entry requirements as
low as motion pictures where the potential return can be as unlimited
over the short, medium and long terms.
For instance, a movie such as “HALLOWEEN” (costing as little as
$320,000 to produce), earned $75,000,000 and it does not stop
earning money - for a lifetime. “RETURN OF THE SECACUS 7” cost
only $60,000 and grossed $2,500,000. BENJI cost $550,000 and
grossed $45,000,000; NIGHT OF THE LIVING DEAD cost $114,000 and
grossed $40,000,000. Etc…………
(Imagine opening your own theater with five screens and seeing the
returns within a month. Of course the movies showing MUST BE
GOOD. Production companies have been made into Empires on the
sole basis of just one movie.) We will get into this later.
There are thousands of other examples where the return was at least
three times anything done by securities listed on the New York Stock
Exchange, the S&P 500 or the NASDAQ.
So why isn’t these pot of gold stories made public? The film industry IS
A MONOPOLY, driven by people who DO NOT IN NO WAY want it to
branch out. So they use scare tactics to keep you away from the
business. But that, has to change. Not only as Alexander’s four
generals did, by creating their own governments. Not only as Religion
did by branching out from one religion to thousands. So also, must the
tree that is in Hollywood must branch out into other Hollywood lands
elsewhere in America. Separate from that core or one entity.
People want escapism, want to be transported into other worlds aside
from their own. They want good stories which means good scripts that
are blue prints to making a good film, even though it has UNKNOWN
ACTORS. Remember, today’s Great actors, De Niro, Pacino, Nickleson
and Eastwood were all unknowns when they started. What made them

6. great? It was the page, that all important 120 page script. Get off
names, and create new stars.
Hide the Gold
If you were hiking alone in the middle of nowhere and you found
nuggets of gold in a river - too many to carry home in one trip - what
would you do? Would you go into town telling everyone that you found
gold and you need help carrying it? No, you would probably be a little
reserved, perhaps even nepotistic and tell only your family
and closest friends. This is what Hollywood does. The reason they call
it, “There’s no business like show business” and discourage ANYONE,
from getting near their business is because they want to keep all the
gold for themselves. So they make the business elusive, mysterious
and blow up the headlines when a movie goes bad, (as in any other
type of business). Only thing is movies stick out like a sore thumb
when they are successful.
For those, “in the know” and those “in the loop” ("Hollywood Insiders"
or "The Club" or the "Control Group"), KNOW that movies are excellent
investments - and they would rather have that fact obscured (as fully
explicated in a book called FATAL SUBTRACTION by attorney Pierce
O'Donnell and Dennis McDougal). Ironically, that little phrase: "THIS
SECURITIES INVOLVE A HIGH DEGREE OF RISK" is very convenient to
The Club, even if it is required under security laws. BUT, it is written
there to “SCARE YOU OFF”. This CLUB in Hollywood wants to “hide the
gold“, or make it unsafe to enter the "forbidden zone“. The Club makes
it look like a Horror picture.
No laws or regulations are written that movies cant be made and
distributed outside the walls of the Hollywood system. That theaters,
movie houses, nickelodeons and art houses cannot be built outside the
walls of the Hollywood theater chains by your funding. There are
plenty of INDEPENDENT MOVIES available to fill any “movie art house”
you build. There are no laws, that a new ratings system cannot be
created to rate Independent Movies, away from the MPAA (Motion
Picture Association of America). In other words, it’s no ones business,
much less those in, “The Club”, or “In the Know”, “The Control Group”
to tell you or US “the explorers” not to get into this business of Moving
Pictures.
I enjoy comparing the Hollywood System of today to the Hollywood
System of the 1960’s. Big extravagant musical pictures that related to
“No One”. Throw more money at the screen and charge more for

7. tickets. Bigger 3-D effects movies. Raise up the price of popcorn and
coke. But I say go back to telling plain simple stories, “No matter what
format its in, no matter how many “real life” moving frames it’s in.
People just want a good story, plain and simple. The movie theater will
not fade into nothingness. It doesn’t matter what Spielberg or Lucas
says, regarding the future of movies, that it will eventually be TV
driven. People will stay home and rent it. I SAY NO WAY! People will
not only want escapism from this world, but they will always want to
leave the home, and go to a big darkened theater with a gianormous
screen and great mind blowing sound and watch a good story at a
good price of value. The audience will as in the 60’s, get tired of the
same microwave oven stories, that are made to dumb down the
masses. What applies to shopping around for a great value, now
applies to the entertainment business of movies. Funders, Investors
you are in a great place to invade the Empire of Hollywood, just as
Alexander the Great did when he brought down the Persian empire -
something UNTHINKABLE!
WHERE TO BEGIN
Go back to the early 1900’s. This includes not only investors but also
actors. Rethink the wheel, but by all means, don’t allow those who
invented it, show you how one is made. Reinvent it yourself.
You begin with one movie, (most profitable genre, “HORROR”) build a
movie theater, attract other Independent filmmakers to fill your five
screen theater, and do a small amount of Marketing, with most of the
marketing focused on the Horror movie you invested in, and only in
the city your going to show it in. How long should you keep a movie
in your theater? You do it as it was done in the 70’s, when reading a
newspaper in the movie section, “Movie held over for 4 weeks”. You
know what that meant? The movie was doing well and good enough to
keep running it on the screen. If its doing bad, you pull it out and
bring in the next movie, see how that does.
The RIGHT MOVIE, a SELLABLE GENRE, the RIGHT VISION can cause
several people if not thousands holding 5 to 7 dollars in the air,
WANTING TO SEE the movie you helped build with your funds.
Imagine a theater which holds 300 people, that times 7 dollars is
$2,100, times 8 showings in one day is $16,800, times 7 days is,
$117,600, times 4 weeks is, $470,000... NOW, imagine the movie is
really good. A movie you invested $1,000,000 in. The average strong
run for a really good movie is 3 months, 3 months times $470,000 is,
$1,411,200 you just turned a profit of $411,200 dollars in 90 days.

8. And this is only showing on 1 screen. Do you see the GOLD on the
streets? Don’t worry if 2 or 3 films don’t Home Run. But, keep batting
and you will eventually hit a Home Run.
A Brief Summary in Studio History
The first owners of the STUDIOS knew something about the
entertainment business, but they were also completely new to the
business of movie making, and just threw anything that was
entertaining up on the small screen inside small Nickelodeons of the
time. They tried anything to make a nickel and eventually it became a
multi-billion dollar a year industry.
1900 - 1915 The Invention of a Movie
True, you know nothing about movies. But neither did, Samuel
Goldwyn, Richard D. Zanuck, Louis B. Mayer. In an age where these
future Studio Owners and would be Movie Titans existed during the
age of vaudeville and stage plays, came the moving image. They
story-line was simple, start the dialogue, end up fighting and start the
chase. And they made oodles of cash doing this in small little
Nickelodeons which played silent pictures at the times.
1915 - 1927 The Invention of Full Feature Length Movies
Eventually, sound caught on (we could now hear the action and hear
the characters talking, making jokes and singing), and a new way of
telling a story and shooting the story with a camera was done.
1928 - 1945 The First Golden Age of Hollywood - The Story Ruled
YES! The story ruled, unknown actors became Great Actors and
household names. Memorable movies and great movies. Movies that
made you think and wonder. During the depression, people ESCAPED
their outside world and went to the movies regardless of the times to
escape the harsh realities. Plain simple movies that moved them and
inspired them to believe and to laugh.
1950 - 1969 Going Down South
Movies became bigger, massive, large sets for movie musicals. More
people flooding the screen and singing. Wider lenses. This is
Cinemascope! Bigger picture bigger profits right??? Wrong, people
were getting tired of the same old story. Hollywood was dumbfounded

9. as to the results of their big extravagant pictures with Big Stars. “Why
isn’t anybody seeing them?” they wondered. Profits were sliding and
slipping. With the invention of the Television tube, people were now
staying at home and watching the television. The first Golden Age of
Hollywood was fading. Sounds familiar huh?
So correct were the words of then head of Paramount Studios Robert
Evans, “You can have stars up the ass, but if it ain’t on the page, it
certainly isn’t gonna be on the screen. It’s time to roll new dice.”
1970 - 1997 The Second Golden Age of Hollywood - The Story still
Rules
The old Studio owners who ruled Hollywood with an Iron Fist were now
getting old and dying. The story-tellers of days long ago. But now,
Corporations were buying up the old fading Monarchs. They knew
nothing of how to run a studio, where movies are made. So they hire
filmmakers of all kinds. Some from college who were graduates and
drop outs and others who never went to film-school. But, they had
within their minds, Great Stories and fresh ideas to show the audience.
But we’re getting to far ahead of ourselves. Back to Robert Evans, (a
half ass actor and women’s apparel clothes maker), who was put in
charge by Gulf Western who bought the big Mountain of Paramount, to
run Paramount Studios. Who put on the screen by choosing the right
scripts, True Grit, The Odd Couple, Rosemary’s Baby, and (the first
movie to have lines wrapped around the theaters) Love Story. Love
Story a simple story about a boy and girl falling in love. To the big time
producers of the time who made big time extravagant movies that
were losing money, Lew Wasserman, head of Universal at the time said
the following, “The audience never left us (meaning Hollywood), we
(meaning Hollywood) left the audience.”
Next came, “The Godfather” enter Francis Coppola, “Taxi Driver” enter
Martin Scorsese, “The French Connection”, “The Exorcist”, “American
Graffiti” enter George Lucas, “Duel” enter Steven Spielberg. And the
results?? A New Golden Age of Hollywood.
Many other filmmakers were coming on board. The Scotts, Ridley and
Tony, James Cameron, Tobe Hooper, John Carpenter, to only name a
few. But there is a problem with this roster of names, they to get old
and run out of ideas. “It’s that age old problem, ‘what’s my next
picture gonna be?” said Steven Spielberg in an interview.
This would continue up till the year 2000. The doors then closed on
any New filmmakers with fresh ideas. The corporations that own the
studios idea? Lets shovel the same story line that has always made us

10. money, bigger films and high tech films, bigger profits. There are signs
that they are now sliding and slipping south just as it did in the 1950’s
and 60’s. So now what?
“That’s the big danger, and there’s going to eventually be an implosion
- or a big meltdown. There’s going to be an implosion where 3 or 4 or
maybe even a half dozen mega budget movies are going to go
crashing into the ground, and that’s going to change the paradigm.”
said, Steven Spielberg.
Investors remember, “Love Story” a simple basic story with no big star
names, no big visual effects, saved Paramount Pictures from the brink
of collapse. Now, today when the corporations that own the studios
whose eyes have only gotten bigger with greed has them thinking of
only BIG PICTURES with eye popping effects and 3-D at expensive
prices. Today the market is wide open for you the investor to grab the
“Niche Audiences” that will flock to your newly made movie theaters.
Enter the Risk Takers and Gamblers of the New Age
All the people need is a good story up on the screen, (a good script).
Even though you have one movie house, a good story will have a line
wrapped around your theater building. In the 70’s when theaters were
scarce, lines wrapped around the theaters because there were not
enough theaters to hold the masses of people that wanted to see the
movies of Spielberg, Lucas, and Coppola. You will have them built as
you learn the business of movie making and distributing.
Remember, the corporations knew nothing about the movie business.
They hired filmmakers to make their movies. Today’s filmmakers have
been shut out, they are making small independent movies and walking
the streets with a film reel under their arm, that could bring in
millions. They need someone to back them, to open a nickelodeon or
theater to show their movies. Where lines of movie goers may also
wrap around the block. Its time for investors, who never thought once
about investing in movies, because they were to afraid, to now more
than ever to think about investing in the movie business and making it
their own.
Movies Are Good For Commerce
For the examples here, low budget feature will be defined as less than
$1.5 million, medium budget up to $4.5 million and high budget
anything over that. The average high and medium budget feature is in

11. release for about 9.1 weeks. The average 3-Day weekend gross of the
top 50 medium and high budget features (per The Hollywood Reporter
between 5 March 1991 and 9 April 1991) was a total of $59,527,179 -
giving an average for each film of $1,190,544 per each 3-Day
Weekend - or a total theatrical revenue of $10,833,950 per film over a
9.1 week run. These figures are conservative compared to 1996
figures.
Low Budget Feature Track Record
Using data on 253 low budget features and extrapolating this data for
2010 dollars, the average gross of each picture was well over
$19,002,030 (IMDB) - theatrical income only. The top 8 pictures made
more than $30,000,000 each and the top picture made $70.4 million.
Averaging these 8 pictures gives an UPSIDE AVERAGE of
$48,175,478. The bottom 8 pictures made less than $2 million each
and the lowest picture earned only $1,593,848 for a DOWNSIDE
AVERAGE of the 8 lowest pictures of $1,872,552 each.
If these 16 UPSIDE AND DOWNSIDE pictures are completely deleted
from the sample of 253 pictures, we get an average gross of the
remaining 237 pictures of well over $7,920,377 each. Call this the
NORMAL GROSS.
For our computations in computing projections, we modified the
UPSIDE AVERAGE and the DOWNSIDE AVERAGE figures with the
NORMAL GROSS and got a conservative $28,047,927 for the AVERAGE
UPSIDE and $4,896,464 for the AVERAGE DOWNSIDE on the theatrical
market alone.
A feature is released on video cassette (film) after the initial theatrical
run. Even if revenues generated in this medium are only 5% greater
(and they are now even more) than the theatrical market, this gives
an upside of $29,450,323 and a down side of $5,141,287. At this time
home video revenues are generating more than twice theatrical so you
can really double the $28,047,927 for the AVERAGE UPSIDE and
$4,896,464 for the AVERAGE DOWNSIDE figures.
Next release is cable (such as HBO or CINEMAX) and this market earns
over 15% of the theatrical market. This generates $4,207,189 on the
upside and $734,470 on the downside. Pay-per-view (such as found in
motels, hotels and resorts) is the next market. We used a figure of 5%
of theatrical revenues giving an upside computation of $1,402,396 and
a downside of $244,823 for this market. When these four markets
are added up and the upsides and downsides are averaged, we get a

12. bottom line figure of $37,062,440 over a 3-year period for each low
budget feature. This is the Short Term gross return at the Exhibitor
level.
Syndication, the selling of a movie to each of the thousands of
individual television stations across domestic U.S., Canada and abroad,
is a form of exhibition that may proceed for 15 years or longer. This
can, and usually does, generate about 200% of what theatrical
revenues were and ordinarily commences about 3 years after release
in the cable markets. Any film, no matter how bad or good, can be
syndicated - as you can readily illustrate to yourself by taking a look at
some of the films on local late-night TV. Gross income from
syndication, based on the average of the upside and downside
theatrical revenues, may be as high as $32,944,391 for each low
budget feature over the course of 15 Years.
Additionally, none of the above revenues include network or ancillary
sales which can be immense for medium and high budget films. Take a
look at the toys generated from BAT MAN and TEENAGE MUTANT
NINJA TURTLES. Now, even low-budget feature producers are getting
involved with local merchants for ancillary sales. Thus the above data
indicates that the total long and short term gross for one feature
motion picture is estimated to be $70,006,831 over an 18 year period.
Past Decade Returns
The Hollywood Reporter and Entertainment Data Inc. present the
following data: The top grossing independent feature, TEENAGE
MUTANT NINJA TURTLES, released by New Line Cinema, earned
$135.3 million in domestic U.S. The Top 40 pictures averaged $28.87
million. Foreign rentals are about equal to domestic gross bringing
the top grossing picture to $270.6 Million and the average to $57.74
million.
SHE'S GOTTA HAVE IT was reportedly made for $175,000 in black and
white and grossed $6.5 million. Roger Corman has made
approximately 250 low budget "B" features and has only lost money on
a handful of them. See his book, How I Made a Hundred Movies in
Hollywood & Never Lost a Dime. His net worth today since 2013 is 40
million dollars.
Planetary Birth Rate
Every DAY, on this planet, there are about 200,000 new movie-goers

13. born who have not seen ANY movie you have invested in or produced.
They have not seen it in the theaters, on cassette in their home or on
cable or free television; they have not read any books based on the
script or listened to any music from the movie sound track.
All these people will be available at some time or other to rent or buy
the movie you invested in - as well as rent and buy the products that
spin off from the movie itself.
Even if 200,001 people die every day as well, that still gives your
movie a whole lifetime, for any particular individual who was born, to
see it and pay you for such rental until there are no human beings left
on the planet Earth. This translates into the fact that there are 73
million people born each year (200,000 x 365) who have not yet seen
the movie you invested in - but will probably see it before they pass
on.
Building a Rental Property
In terms of quantifiable potential if all went right that possibly could,
what is the maximum amount of money a movie can gross and what is
this compared to a real estate investment? You can build a 60-unit
apartment complex for $3 million. You can rent each apartment to one
or two people for $500 to $700 or more per month (average $600)
per unit for a total gross income of $432,000 per year. To make more
rental money, just add more rental units at a cost of $50,000 each and
figure out how to get rid of the expenses and debt service you most
likely have wrapped around your neck. And if you have ever dealt with
zoning authorities and mortgage lenders, you know what you can be
put through.
You can build a movie for $1,000,000. This is 3 times less capital than
the apartment. You can rent that movie to a potential 73 million people
for, using a round number, $5.00 per ticket for a total gross income of
$365 million dollars per year. To make more rental money, just sit and
wait for another year and there will be another 73 million people born,
sooner or later who have not seen it, but can afford it far before they
can afford $600 rent on an apartment.
For your $1,000,000 movie investment, you have 844.9 times the
income POTENTIAL over a twenty-year period ($365 million divided by
$432,000). Therefore, if we consider it is as easy to build and market a
movie as it is to build and market a building - just two different types
of know-how - it makes a lot more sense to invest in movies than in
real estate for the same effort.

14. New Media
You can spend 5 to 9 dollars to see one movie in a movie theater or
you can spend $2 - 4 to see each of five movies in your home.
If you are like many people, you like doing both. Big special effects
pictures should be seen in a theater. Then, later they will be rented so
one can savor the special effects on DVD. Many people will see a
thriller such as NO WAY OUT or THE USUAL SUSPECTS and then rent it
over and over so every nuance of the plot twists can be appreciated. If
you have kids, you know that they will often want to rent the same
(damn) movies over and over until you realize that you were an idiot
for not buying the disk in the first place. But then you DO buy the disk
inevitably and hate yourself for being such a procrastinator. You as a
movie investor should love this, because it’s all the more revenue.
Even if your movie turns out to be a lousy piece of garbage, it will still
rent in some percentage of the over 125,000 video outlets across
America for a lousy dollar sometime within the copyright duration (60
years). With a good video jacket, some button-topic or a name star,
perhaps 25% of the video market will purchase at least two copies of
the cassette at $80 each from your distributor. That works out to a
gross in only one of several markets of $5,000,000 on a product that
can be made for well under a million dollars. This is just in the U.S. It
can do the same in the rest of the world, so that's $10 million. That
should pay back your investment many times over within a fraction of
the time you amortize the mortgage on any piece of real estate.
Over the course of twenty years, can you tell me you can make more
on real estate when your movie investment can make you over $224
million - (5.6 + 5.6) x 20?
Risk is Relative
SINCE THE MOVIE INDUSTRY IS A STAR-STUDDED, HIGH PROFILE
INDUSTRY, ALL FAILURES ARE PROMOTED MORE BLATANTLY THAN IN
OTHER INDUSTRIES. PEOPLE IN GENERAL, AND INVESTORS
ESPECIALLY, ARE THEREFORE MORE EASILY ABLE TO CITE THE
FAILURES AND USE SUCH AS A NEGOTIATING POSTURE AGAINST THE
PRODUCER OR AS A "REASON" WHY THEY SHOULD NOT INVEST. IF
YOU LOOK CAREFULLY, YOU WILL FIND THAT THERE WERE MANY,
MANY FAILURES, OF EQUAL OR WORSE MAGNITUDE, IN OTHER
INDUSTRIES THAT WERE SLIPPED QUIETLY UNDER THE RUG BECAUSE
SUCH INDUSTRIES ARE NOT HIGH-PROFILE LIKE THE MOVIE BIZ.

15. Therefore, the term "risk," at the very best, has relative meaning. This
"meaning" is usually bantered around as a negotiating tool. Portray
some investment as being more of a "risk," and one increases his
share of "justifiable" compensation for taking that "risk." It's one of
the oldest games in business.
Banks do this all the time with credit files. They use the negative
information in credit reports to extort higher points or rates out of
borrowers and it always seems to take forever to get these reports
corrected. Banks use these short term credit reports to justify their
perception of the "risk" they are taking for long or short term
borrowers. A person could have been out of work once in their life,
missed a bunch of credit card payments, and this is what will stick in
their credit report. These reports say nothing about the fact that the
delinquency represents a period of time of perhaps 1/30 of their life.
The reports say nothing about the fact that the person
made, phone, electricity, gas and department store payments on time
for 29 years. The credit report says nothing about the fact that the
person was a good credit "risk" for 29/30ths of their life on five other
accounts or with ten of their friends. Yet when a mortgage application
is being reviewed by the bank, the person is RISKY and so
extra points must be charged (or extorted by the lender) to make it
"SAFE" for them to make the long term financing. And the higher the
Fed rate, the more the banks play this game.
Don't think that this same RISK MENTALITY doesn't apply to some
equity lenders as well -- although the "extortion" manifests itself in an
additional way. These lenders want to CONTROL the investment by
either owning most of the stock or equity, by sitting on the board, by
being an officer, by having some right to rescind a vital element
OR . . . all of the above. Many times their obsession with RISK and
CONTROL ends up sinking the project. They would have been better
off picking a
good horse and letting it run.
If you have ever read a prospectus or investment memorandum you
will see a disclaimer which says "THESE SECURITIES INVOLVE A HIGH
DEGREE OF RISK." Granted, making movies has risk connected with it,
but so what, every activity is risky, including investing in T-Bills,
especially now when we have a government that is over $6 trillion in
debt and a balance of trade deficit that’s ready to explode. If you
know your history, you know that an unbelievable number of
civilizations and governments have come and gone in just the past

16. 2,000 years. Some songs have lasted longer than civilizations that
once covered a fifth of the planet's surface.
The fact that a movie investment has an immediate potential of
returning ten times what a 20 percent return on equity investment
would, means the investor can afford to lose three out of four such
investments and still be even. Thus, risk is (not only relative to other
investments), it's relative to potential gain.
Lastly, looking at the stock market between late 1999 and 2009, can
you honestly say that there's NO RISK, or ever LOW RISK, in investing
in big mutual funds or big anything? Many stocks in the Dow lost over
60% of their value. Investors in these stocks are now sitting back
watching movies in total apathy . . . and of course, this benefits you as
a movie investor as well. No?
Dishonesty
The only thing that could be considered "risky" is shrinkage in
distribution due to dishonest distribution and exhibition.
This risk is on the way out because producers once could not track all
the thousands of ticket sales all over the world and over syndicated
television. Now personal computers make it simple to track thousands
of transactions in a nanosecond.
Besides, it is NOW possible to electronically transfer money to
everyone involved on the production and distribution of the picture
right from the ticket booth. Thus everyone is a Gross Participant and
no one can steal from anyone up the payback chain to the Producer's
investors.
Further, many distributors are also producers and many producers
have become distributors. Both communities are working more
together and have a better respect for each other as they become
aware of each others' symbiotic needs. Dishonesty is reduced towards
zero.
Considering the amount of money and the amount of employment in
the movie industry, there is less dishonesty in the movie business that
any other business of comparable size. The reason is simple: The
"Players" (the ones who are hiding the gold), know each other so it is
very difficult for anyone to get away with fraud or dishonesty for very
long.

17. THIS IS THE GAME CHANGER NOW. You the investor will invest in
making a high-tech, movie theater chain or only starting with 4 or 5 on
in each major city in your state. Now, you will know where all the
profits are domestically.
In the meantime, you will set up overseas distribution with other
theater chains that are not related to Hollywood. Since theaters are
more wide scattered throughout Europe and in other parts of the
world. Your profit margins will be greater in these areas.
Recoupment
You can invest in the DEVELOPMENT of movie projects and recoup your
investment the minute the movie goes into production and still retain
ownership in the profits generated from distribution.
An investment in the development of movie projects means you are
investing in the story, the talent package and the producer's ability to
get it financed.
An investment in the production of a movie means you are investing in
the producer's ability to see the project through development,
successful completion and marketing.
Development investment usually gets you the most "Points" (units of
ownership) per dollar. No securities rise in value as fast as
development Points in a movie that will go into production. Points
continue to rise in value forever because the movie can be
rented forever as long as new people are born on the planet Earth.
Distribution Breakthroughs
It is becoming technologically easier and easier to distribute motion
pictures. In the old days, a feature length movie had to be carted
around in huge cans weighing hundreds of pounds. These had to be
trucked all over the country at great expense and hassle. Each print
costs about $2,000 as well. If your film was not a box office
success, it was just not worth the headache of distributing it - so it
would be pulled the minute another film came along that might be
"worth the distribution hassle." Needless to say, many films sat on
shelves because of this "system" of distribution.
Even though, at the moment, the quality of home video movies is not
as good as theatrical presentations, it will be when High Definition TV

18. (HDTV) is in every house and people generally view movies on DVD’s.
HDTV will cause even more people to rent the movies because they
will not only be as clear as theatrical presentations, but the aspect
ratio is closer to wide screen. This coupled with digital sound, wired
through home stereos, and the theaters will have to go to SHOWSCAN
to compete.
What is SHOWSCAN? SHOWSCAN invented by Douglas Trumbull,
projects 70mm prints at 60 frames per second as opposed to
conventional systems that project 35mm prints at 24 frames per
second. No scratches or illusion that you are looking at a screen is
apparent in the SHOWSCAN system and the image looks perfect and
truly three dimensional. The image and show quality are so perfect
that ticket prices are justified in being higher than normal ticket prices.
Going to an opera, live play or concert is nowhere near the thrill or
value of any well made SHOWSCAN motion picture because, in effect,
there is no discernable difference between the "live" show and the
SHOWSCAN performance.
There will be another boom like you will not believe in home
entertainment as well as theaters and hopefully investors will be savvy
enough to have hedged their bets in the proper direction - movie
investments.
Pay-per-view & Cable
Pay-per-view is the next big Golden Goose. The only reason Pay-per-
view slacked off is because it is still waiting for fiber optic lines to go in
place, satellite systems to become more effective or duplexing digital
cable. The bandwidth of fiber optic systems is easily wide enough to
send many on-demand video feeds even over phone lines. This is
widely in place (and already there are transcontinental lines, such as
SPRINT, and GLOBAL CROSSING, operating) you are able to download
or stream movies and play them directly on your PC or dump them
onto your VCR or a hard drive. Large amounts of video are storable in
random access computer memory or on read/write DVD's. To get a
movie, you will just press a button on your remote control (or cable)
and be billed. The 73 million people are able to "just charge it" to their
phone bill or to their debit or credit card.
Put simply, as time goes on there will be easier distribution conditions
on all fronts. Every movie that is made will be distributed and all will
generate rentals. No one complains when they have dropped a dollar
for a lousy movie. If they have dropped $5 (or $10 on a date) plus a

19. drive over to the theater for a lousy movie, that's something different -
they complain. Thus negative word-of-mouth will mitigate and
positive word of mouth will stay the same or increase. The net result is
that the movies you invested in, all of them, will rent more and you
will make more money.
Internet-based Video-on-demand
The best news of all is the Internet as a universal distribution medium.
Already there are between 500,000,000 and 1,000,000,000 people
connected to the Internet, depending on whose data you want to
believe.
Internet-based Video-on-demand potentials:
Bill Gate Quotes:
In 1998 Bill Gates said: "One billion computers will be in existence by
the year 2003 and over 100 million of them will be connected to the
Internet with multi-media capabilities." "Once the costs to build a
broadband network are low enough, video-on-demand has the
potential to be a "killer application" -- a use of technology so
attractive to consumers that it fuels market forces and makes the
underlying invention, on which it depends, indispensable."
Approximately 500 million broadband subscribers were in service in
2010.(wiki)
 Internet Growth rate is 11% per year
 Broadband Growth Rate is 90% per year
Possible Video-on-Demand Revenues:
Over 30 million Echo Boomers in the U.S. alone between the ages of
about 16 and 21 that are potential movie goers (not to mention the
over 40 crowd, that's almost as big). Sell a video-on-demand to just
10% of this market in a given month and that's 3 million sales. Price
each video-on-demand at $1 and that's $3,000,000 million gross
revenue.
If an Independently-produced feature only costs $500,000, that's a net
profit of $2,500,000. If the Investor gets 25% of this from the gross
as an (without any "creative accounting"), that's $625,000 in post-
recoupment income. Right there, that's return on investment of over

20. 100%.
If you do these sales each month, an Investor is looking at before-tax
profits of $7,500,000 a year. Then double this for the 30 million Echo
Boomers in the rest of the world and you have $15 million right there.
What about all other rights such as HOME VIDEO, CABLE, PAY-PER-
VIEW, SECONDRUN CABLE, NETWORK, SYNDICATION and even
THEATRICAL, if the picture is good enough? What if you charge $2.00
per download?
Be Big Be Bold and Move with Stealth
Invest in a movie theater of your own! 2 or 5 screens can be showing
movies of all kinds. But certainly you want them to be movies that
WILL RETURN a profit. There are filmmakers walking the streets by the
dozens, if not thousands. Hollywood has already shown the only thing
they are interested. Microwave movies, Big, Explosive,3-D Action
Movies that will cost the average movie goer a fortune to go and see.
Ticket sales will skyrocket. People will resort to watching their wide
screens at home. And Hollywood will release 4 or 6 movies that will
cost a fortune to make, in the hopes that people will go see them. But,
they won’t and Hollywood will implode, just as Steven Spielberg
predicted. And as George Lucas said, the Niche Audience that love
simple stories, simple comedy, thrillers, suspense, and romance love
stories will be gone from the big screen.
And yet, it was a small simple Love Story that saved 2 studios
(Paramount Pictures and Dreamwork’s Pictures)from the brink of
collapse and bankruptcy. The movie was called “Love Story” a simple
movie, about a boy and girl falling in love. It’s profits soared, lines
formed around the block day after day. It saved Paramount Pictures,
the studio that would eventually save Dreamworks Pictures decades
later all owed to a small little film. Clearly today we slowly see AGAIN,
the Big studios abandoning the AUDIENCE.
You as an Investor can invest in building movie theaters. You can take
advantage of the average movie goer, the Niche Audience that Lucas
says, Hollywood is ignoring. It will guarantee movie ticket sales for
your theater. The search for the next, Coppola, Spielberg, Lucas,
Scorsese may be walking out there with a film underneath his arm this
very day. Filmmakers that Hollywood has locked out. Your investment
in movie theaters could very well be showing their next films to
audiences that could be flocking to your theaters.

21. A New Ratings System
Moving away from the MPAA is a must, if you the theater owner want
films to be rated justly. The MOTION PICTURE ASSOCIATION OF
AMERICA has made it difficult for filmmakers to get a fair rating on
their films, unless your film comes from one of the Hollywood Big
Studios, (what looks like “violence, sounds like “foul language”, a
rated R film would be rated PG-13 if a Big Hollywood Studio made the
production). The MPAA rates all films and it is driven and rated solely
by Theater Owners.
This new Ratings system for Independent Filmmakers would be made
up of family’s, couples, individual people made up of all walks of life.
The AMERICAN INDEPENDENT FILM ASSOCIATION will be catered to
Independent Filmmakers. It’s members will be carefully selected. No
religious leader will be present during the showing of a film nor his or
she ‘s religious influence be put upon it. It will solely be the conscience
of the people.
Invest in Movies?
It is safe to say that at least 730 million new moviegoers each decade
(73 million x 10 years) will come on line to watch movies. Even the
poor in many countries buy color televisions and make monthly
payments as avidly as they spend money on food and rent.
So is an investor crazy to NOT invest in the movies? YES, HE OR SHE
IS CRAZY TO NOT INVEST IN MOVIES ON A REGULAR COST AVERAGE
BASIS. All they need do is get rid of those elusive, mysterious fears of
the movie business that Hollywood spins before them, (making the pot
of gold hard to get to, and a map that cannot be understood to get to
the gold and if you try, it is dangerous and a “Forbidden Zone“.
With all of the above reasons -- not to even mention new markets,
such as China (with 1.2 billion new potential moviegoers) and India
(with 900 million new potential English-speaking movie goers) coming
on line -- an investor would be imprudent to not take a serious
look at the potential risk to reward ratios of movie investments at this
time. Not to mention, that “Niche Audience” that is being ignored by
Hollywood Land. There is now gold literally on the streets everywhere.
So, do not fear the myths or superstitions.