Avatar, X-Men and Planet of the Apes are all major big screen hits in which film investment company Ingenious Investments have a stake; but the company’s CEO James Clayton told CNBC that these sorts of ventures should be balanced with lower cost independent productions.
"It is certainly true that the hit-rate is thin. It is very much a hit driven business, you need to diversify your investments and hold a portfolio of films if this is an area that interests you," Clayton said.
Even a film such as Avatar, with its estimated $300 million cost, presented a huge risk that needed to be balanced with other productions and a consideration of what the film represented and who was involved in its creation.
"It was a big risk. For us it was part of a portfolio of 22 films. James Cameron’s track record is second to none and he was setting out—and he succeeded—in making something that was completely pioneering and like no other experience you could enjoy in a cinema," Clayton said.
He was optimistic about the future of the industry: "It is a perfect storm for alternative assets like this. The volatility in capital markets over the past 12 months and interest [rates] running way behind inflation means that investors are re-focusing their attentions in this area."
But it isn’t a fairytale ending every time—films like Avatar do not come along all the time and even when they do, investors are not the only ones who need to be paid.
"About 100 British films are made a year and about five of those will make any money," warned Christine Corner of UK-based accountancy firm Grant Thornton. "People always say that films make a huge amount at the box office. Actually the investors do not see very much of that money."