Elian D. Alvarez

@eliandalvarez

The Unicorn Movies — Biggest ROIs vs Biggest Winners

There are lot of players involved in the film industry such as film production companies, film studios, animation, screenwriting, distribution; and of course actors, directors, and other film crew personnel.

All of them make a global industry that shows projections for the coming years from about USD 38 Bn. in 2016 to USD 50 bn. in 2020.

But when it comes to thinking about the earnings of the industry, all of us think about the best sellers or the box office grosses or what its also known as The Billion-Dollar Film Club.

And of course we will find in that list the following top 5:

  1. Avatar — Worldwide Gross: USD 2,787,965,087
  2. Titanic — Worldwide Gross: USD 2,187,463,944
  3. Star Wars: The Force Awakens — Worldwide Gross: USD 2,068,223,624
  4. Jurassic World — Worldwide Gross: USD 1,671,713,208
  5. The Avengers — Worldwide Gross: USD 1,518,812,988

But when we check the ROI of these movies, we can see that Avatar had a total production budget of $ 425.000.000.- which means a 556% ROI. A huge return for the investors and everyone who bet on the James Cameron project.

When it comes to the most profitable movies, based on Return on Investment (ROI), none of the previous list made it to the following one.

If we think of them as an asset class, film would appear to be uncorrelated to the other types of investments and somewhat recession resistant as people still go to the movies.

As any other investment, diversification is a key part. Invest in a portfolio of films, rather than a single production. Through diversification comes a more proper balance of risk and return.

The film industry only confirms the great quote by George Soros:

Money is made by discounting the obvious and betting on the unexpected.

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