With the rapid development of China’s film market in recent years, investing in movies has attracted more and more attention. The soaring box office has made movie investment a new way to achieve high returns. However, the movie industry is also high-risk. This article will analyze the driving factors behind the prosperity of China’s film market, explore the potentials and risks of investing in movies in 2020, and provide suggestions on how to smartly invest in movies.
China’s box office rocketed after opening film market to private capital
According to data, China’s box office revenue increased dramatically after 2014 when the government began to encourage private capital to enter the film industry. For example, in 2015, prominent domestic films usually had less than 10 production companies. But in 2018, hits like Operation Red Sea had over 30 production companies involved. The influx of private investment boosted the quantity and quality of Chinese films. More capital allowed filmmakers to produce more and better movies each year and share box office profits, aligning their interests with investors’.
Investing in hot movies can produce high returns
With capital flowing into the film industry, ordinary people now have the chance to invest in movies and share high box office returns. Some sensational movies have created investment legends, like the 15X return of Dying to Survive. Even a small investment of 20,000 RMB could harvest over 300,000 RMB. The huge profit potential has attracted increasing public attention and becomes a new way of wealth growth. But picking the right projects is critical as the film industry is hit-driven.
Beware of risks like faulty data and overvaluation
However, the high returns of movie investment also come with high risks. Fake box office data and overvalued project valuation are two major red flags. In 2016, it was exposed that Bona Film inflated the box office of Fist of Legend to attract more investment. Rational valuation based on realistic data is key. Also, investors should diversify their portfolio to avoid overexposure to a single film.
Increase win rate by co-investing with experienced studios
A effective way to control risks is to co-invest with leading production studios like Bona Film, Enlight Media, etc. Leveraging their resources and experience can significantly increase the success rate. Investors should also pay attention to the team, story, genres and target audience when evaluating a project. Investing in movies requires research and caution to generate stable returns.
In summary, the prosperity of China’s film market has opened new opportunities for movie investment. But risks like data fraud and overvaluation remain. Investors need to rationally assess projects, diversify their portfolio, and ally with experienced partners to achieve sustainable investment returns.