If you think that the value of
your movie and documentary film library
remains the same year to year,
think again.
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Written by Stephen J. Kerr & Sarah Nean Bruce
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via Wikimedia Commons
PREAMBLE:
We had a conversation the other day with a prospective new client about the value of a motion picture library that they were looking to acquire – and the comparative value of the company that owns those films. That conversation reminded us how outmoded the thinking is for many entertainment professionals who see the value of their film assets as unchanging.
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We had a conversation the other day with a prospective new client about the value of a motion picture library that they were looking to acquire – and the comparative value of the company that owns those films. That conversation reminded us how outmoded the thinking is for many entertainment professionals who see the value of their film assets as unchanging.
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As appraisers, we look at valuation differently than the creators of movies and docs do. We are most interested in the remaining economic life left in the assets, and less interested in the critical success of the film when it was first released in theaters. Yes, the cast, director and box office success of every film does play a part in its Future Value, but how exploited the film was upon release, and the state of the distribution rights, weighs heavily on its Present Value.
Let’s explain by way of an example: If you have two movies, one was critically acclaimed and sold extensively around the world under long term contracts, it may not be worth as much as a lesser known film of equal quality, that was not widely released. The reason is that the second film can still be sold in global markets where it has not yet been exposed. And, the first, better known film could have exhausted 90% of its territory avails.
➜ The Present Value of any asset is directly proportional to its revenue producing future.
Even a great motion picture, or documentary, that has been heavily sold around the world under long-term contracts, can have very little future economic value – just a few years after it was released.
➜ Beware of long term commitments.
If you sell a motion picture to Netflix or HBO under an exclusive, world-wide, 7-year distribution deal, you might like the initial pay day, but the value of the asset could be diminished because the distributor (or producer) loses the right to then sell the film elsewhere. Increasingly, the big OTT channels - like Netflix and Amazon - are demanding world-wide, long-term contracts to acquire films and series. If you are getting top dollar from these broadcasters then by all means make the deal, but remember what you are losing – long-term income from incremental sales. It’s a trade off that you need to consider.
Back in the day of disks and video stores, it was easier to continue selling film assets into an ever-expanding, global marketplace (piracy issues aside). But today the free market for movies and documentaries has narrowed, with only a few global players dominating the digital channels of distribution. Many film distributors we know are beginning to question why they are even attending the global sales markets. With fewer international rights to sell, and low prices being paid for their legacy film assets, the costs of attending film markets may not be justified by the revenue generated.
If you sell a motion picture to Netflix or HBO under an exclusive, world-wide, 7-year distribution deal, you might like the initial pay day, but the value of the asset could be diminished because the distributor (or producer) loses the right to then sell the film elsewhere. Increasingly, the big OTT channels - like Netflix and Amazon - are demanding world-wide, long-term contracts to acquire films and series. If you are getting top dollar from these broadcasters then by all means make the deal, but remember what you are losing – long-term income from incremental sales. It’s a trade off that you need to consider.
Back in the day of disks and video stores, it was easier to continue selling film assets into an ever-expanding, global marketplace (piracy issues aside). But today the free market for movies and documentaries has narrowed, with only a few global players dominating the digital channels of distribution. Many film distributors we know are beginning to question why they are even attending the global sales markets. With fewer international rights to sell, and low prices being paid for their legacy film assets, the costs of attending film markets may not be justified by the revenue generated.
➜ The value of any intellectual asset is measured by its ability to return an income to its owner.
If all the income has been drained out of an asset upon its original release to the marketplace, don’t expect that asset to spontaneously manufacture value simply due to its existence.
If all the income has been drained out of an asset upon its original release to the marketplace, don’t expect that asset to spontaneously manufacture value simply due to its existence.
➜ The marketplace for films is forever changing.
Examples of asset value changes: you might have a film that featured Chris Pratt or Emilia Clark when they were still unknowns, and another with Mel Gibson or Kevin Spacy when they were well-knowns. The value of every motion picture is dynamic and changes every year based on market forces, and the value of the underlying movie stars, directors, and producers (think Harvey Weinstein). New markets (like China) are opening to English-language films that have previously been closed, and that can create new revenue from older IP, resulting in a higher asset valuation.
Examples of asset value changes: you might have a film that featured Chris Pratt or Emilia Clark when they were still unknowns, and another with Mel Gibson or Kevin Spacy when they were well-knowns. The value of every motion picture is dynamic and changes every year based on market forces, and the value of the underlying movie stars, directors, and producers (think Harvey Weinstein). New markets (like China) are opening to English-language films that have previously been closed, and that can create new revenue from older IP, resulting in a higher asset valuation.
➜ A film library is not a bag of rocks – nor is it necessarily a bag of diamonds.
Each production needs to be assayed for its commercial value and compared to other films of a similar quality, age and marketability. Only then can intellectual properties be accurately appraised.
If you are curious as to the current value of a library, or individual film, please contact us.
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Each production needs to be assayed for its commercial value and compared to other films of a similar quality, age and marketability. Only then can intellectual properties be accurately appraised.
If you are curious as to the current value of a library, or individual film, please contact us.
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Let us help you.
Our firm, Bel Âge Médias (B.Â.M.}, is a company specializing in providing Business Development, Branding Guidance, Mergers & Acquisitions (M&A) expertise, Exit Strategies, and Investment Banking services. Additionally, under out ongoing Streaming / OTT / 4K / Ultra HD initiative, we continue pursuing strategic alignments with high-end, entertainment technology providers, and explore low-cost alternatives for theatrical, televised, streamed, and online distribution of 4K and 2K films & television programs globally.
Bel Âge Médias • Santa Monica, California
Call Us - or Visit Us Online - or Email Us:
+1 310 666-6474
https://belagemedias.com/
Stephen(@)BelAgeMedias.com • Sarah(@)BelAgeMedias.com
LinkedIn-Stephen J. Kerr – https://www.linkedin.com/in/stephenjkerr
LinkedIn Sarah Nean Bruce – https://www.linkedin.com/in/sarahneanbruce
Our firm, Bel Âge Médias (B.Â.M.}, is a company specializing in providing Business Development, Branding Guidance, Mergers & Acquisitions (M&A) expertise, Exit Strategies, and Investment Banking services. Additionally, under out ongoing Streaming / OTT / 4K / Ultra HD initiative, we continue pursuing strategic alignments with high-end, entertainment technology providers, and explore low-cost alternatives for theatrical, televised, streamed, and online distribution of 4K and 2K films & television programs globally.
Bel Âge Médias • Santa Monica, California
Call Us - or Visit Us Online - or Email Us:
+1 310 666-6474
https://belagemedias.com/
Stephen(@)BelAgeMedias.com • Sarah(@)BelAgeMedias.com
LinkedIn-Stephen J. Kerr – https://www.linkedin.com/in/stephenjkerr
LinkedIn Sarah Nean Bruce – https://www.linkedin.com/in/sarahneanbruce
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Endnotes / References:
1 – So What Exactly Are Film Libraries Worth Now? by Nikki Finke - https://deadline.com/2010/02/what-exactly-are-film-libraries-worth-now-25222/ | DEADLINE - February 11, 2010.
2 – Film Library Acquisitions - Valuation and Strategy by Pras Chaudhuri - http://prasenjitchaudhuri.blogspot.com/2010/09/film-library-acquisitions-valuation-and.html |OBSERVING ANALYTICS-DRIVEN TRANSFORMATIONS - September 29, 2010
3 – Valuing a Single Film or Entire Film Library By Stephen J. Kerr - http://www.bizmark.net/blogs/valuing-a-single-film-or-entire-film-library-updated |BMC Online - May 17, 2016
4 – How Much Are Films Worth? By Stephen J. Kerr - http://www.bizmark.net/blogs/how-much-are-films-worth | BMC Online - April 4, 2017
1 – So What Exactly Are Film Libraries Worth Now? by Nikki Finke - https://deadline.com/2010/02/what-exactly-are-film-libraries-worth-now-25222/ | DEADLINE - February 11, 2010.
2 – Film Library Acquisitions - Valuation and Strategy by Pras Chaudhuri - http://prasenjitchaudhuri.blogspot.com/2010/09/film-library-acquisitions-valuation-and.html |OBSERVING ANALYTICS-DRIVEN TRANSFORMATIONS - September 29, 2010
3 – Valuing a Single Film or Entire Film Library By Stephen J. Kerr - http://www.bizmark.net/blogs/valuing-a-single-film-or-entire-film-library-updated |BMC Online - May 17, 2016
4 – How Much Are Films Worth? By Stephen J. Kerr - http://www.bizmark.net/blogs/how-much-are-films-worth | BMC Online - April 4, 2017
Image Credits:
WIKIMEDIA-Film_archive_storage_(6498619601).jpg – By DRs Kulturarvsprojekt from Copenhagen, Danmark (Film archive storage Uploaded by palnatoke) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
PHOTO_Sarah&Stephen.png – by BelÂgeMédias
WIKIMEDIA-Film_archive_storage_(6498619601).jpg – By DRs Kulturarvsprojekt from Copenhagen, Danmark (Film archive storage Uploaded by palnatoke) [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
PHOTO_Sarah&Stephen.png – by BelÂgeMédias
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PUBLISHED AT:
LinkedIn-Stephen J. Kerr – https://www.linkedin.com/pulse/… stephen-kerr/
LINKED AT:
LinkedIn Sarah Nean Bruce – https://www.linkedin.com/pulse/… sarah-nean-bruce/
PUBLISHED AT:
LinkedIn-Stephen J. Kerr – https://www.linkedin.com/pulse/… stephen-kerr/
LINKED AT:
LinkedIn Sarah Nean Bruce – https://www.linkedin.com/pulse/… sarah-nean-bruce/
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