Q : What is Film IPR?
A : IPR = Intellectual Property Rights are the rights created when you make a film. These rights are like an asset that can be sold for revenue. This asset has perpetual value and is leased to various buyers from time to time to generate revenue for the IPR owner.
Q : How do films make money?
A : Films make money from various sources – theatre tickets worldwide, television rights exploitation, sale of rights for dvd, video rental, music, internet, gaming, merchandising, remake rights.
Q : What does it mean when a film is a “HIT”?
A : The word hit is often colloquially used to denote a degree of success. When a film recovers more than 2-3 times the money invested, it is termed a “HIT”.
Q : What is the maximum upside that one can see in a film?
A : Films have been known to give up to 4-6 times the initial amount invested in them. In the last two years with all around growth, a number of films have delivered such returns.
Q : Is there insurance cover for film producers?
A : Yes. Comprehensive insurance cover is available to film production companies today to safeguard against any untoward incidents while a film is in production which includes accidents, fires, equipment loss, theft etc. A producer can also opt for key man insurance for his lead actors, which insures him against any loss if anything were to happen to the actor which caused delays or stoppage of his film project.
Q : What does it mean when a film is a “FLOP”
A : The term ‘FLOP’ is usually given to a film which has not performed in the box-office. In the current scenario with fast growing alternative revenue streams like television rights, dvd, dth, online and gaming, most films can limit their downside to 10-15% of the production cost. This usually gets recovered over a medium term due to exploitation and re-sale of IPR rights.
Q : What kind of valuations do companies in the Film Entertainment command?
A : Film entertainment ventures command an average of 30-40 times earnings in the BSE/NSE markets. In the private equity space this can be as high as 25-30 times earnings.