With the rapid development of the entertainment industry, investing in TV shows has become an emerging option for investors to consider. Compared to traditional investment vehicles like stocks and real estate, investing in TV shows can provide attractive returns while also diversifying one’s portfolio. However, there are unique risks and strategies involved when investing in TV shows. In this article, we will explore how to strategically invest in tv shows and use it as a way to diversify your investment portfolio.
Conduct in-depth research on the trends and profitability of the entertainment industry
The first step is to thoroughly research the entertainment industry, especially the TV production sub-sector. Look at factors like viewership trends, streaming vs traditional TV, profit margins of production companies, and the track record of successful shows. This will give you an idea of which genres, production houses, and distribution platforms to target. For instance, streaming media investments may be preferable to traditional cable TV. You can also look at ancillary revenue streams beyond pure advertising, like merchandising rights. Having in-depth industry knowledge will allow you to invest in tv shows strategically.
Assess the potential return on investment of different shows under consideration
Not all TV shows are created equal when it comes to investment profitability. Factors like production budgets, genre, creative talent, distribution channels, and target demographics will impact the potential ROI. For instance, a high-budget sci-fi show on a streaming platform may have more revenue potential than a low-budget comedy on cable TV. You need to objectively assess the ROI potential of each show you are considering. This analysis can be qualitative and quantitative – from projected viewership, ad revenue, syndication, international distribution, ancillary streams etc. Only invest in shows that clear a certain ROI hurdle rate specific to your investing goals.
Structure the investment deal properly by negotiating terms with the production house
The investment structure is key to managing your risk-return profile. TV show investments are often structured as limited partnerships where the investor contributes a portion of the production budget in exchange for a proportional share of the backend profits. You need to negotiate fair terms regarding the % share of profits, % ownership of IP, distribution rights, payment timelines etc. Hire an entertainment lawyer to review any proposed deal. You can also explore debt-based investments by providing a loan to the producer in return for interest payments + a share of profits. Do not treat TV show investments as passive investments – be actively involved to protect your interests.
Diversify across multiple TV shows in different genres, budgets and platforms
While TV shows can provide attractive returns, they are also high risk investments with binary outcomes (hit or flop). To manage this risk, diversify your TV show investment portfolio across different types of shows. Do not invest in just 1-2 big budget shows. Invest modest amounts in both high budget and low budget productions, across different genres, production houses, distribution mediums, target demographics and geographic markets. Some shows will fail, but with diversification your overall portfolio returns will be more stable. Diversification also gives you more upside if one show becomes a runaway hit.
Investing in TV shows can be a rewarding way to diversify your portfolio beyond stocks and real estate. But it requires in-depth industry research, ROI analysis, smart deal structuring, and diversification across multiple shows. Follow these strategies to invest successfully in TV shows.