5 Reasons to Invest in the Entertainment Industry

Investing in the entertainment industry is often described as high risk, but there are many reasons investors choose to put money in it. Along with the risk, there is a possibility of high returns and a payoff that can continue over a long period. With mutual funds, it is now possible to spread the risk. Entertainment industry investments offer an opportunity for great personal satisfaction. Finally, despite the high cost of entertainment offerings such as motion pictures, investors can participate at very low levels of investment.

No. 1 - High Possible Returns

All non-insured investments have risk, and entertainment industry investments are considered among the most risky. Often, a great deal of money is poured into a single project with success depending on unpredictable public acceptance, critical reviews and a host of other factors beyond the investors’ control. However, if an entertainment product becomes a hit, it can produce returns that far outstrip less risky investments.

This is very apparent in film, but extends to music and theater as well. As an example, the Rogers and Hammerstein musical "Oklahoma" was considered so risky, producers were raising money up until opening night with no idea whether the innovative work would draw an audience. It ran five years on Broadway and continues to be performed 900 times a year worldwide, more than 60 years later.

No. 2 - Shared Risk Is Possible

A mutual fund combines the dollars of hundreds, even thousands, of investors into one large, professionally managed investment which is spread across a range of companies. Entertainment industry mutual funds allow investors interested in the segment to participate without placing significant dollars in one “make or break” project. While the upside of returns is typically less, the downside risk is less as well.

No. 3 - Personal Satisfaction

Typically, an investment in an entertainment industry product brings with it the opportunity to participate in such activities as opening night or premiere events and cast parties. Likewise, an entertainment product often focuses on a particular theme or issue. Entertainment industry investments allow investors to materially participate in causes that are of personal importance and to enjoy association with those in the industry.

Investments should first be evaluated on the possible return for a given risk. But if an investor is comfortable with that aspect of a potential project, there can be a personal payoff that many more traditional investments do not offer.

No. 4 - A Range of Investment Levels

With the eye-popping budgets of many movies and theatrical events, it is easy to believe that only large investors can participate in the entertainment industry. As mentioned above, mutual funds offer the opportunity for investment in the entertainment industry at a variety of levels. But beyond that, by investing in an independent film, the initial production of a musical or a new band’s first recording session, it is possible to participate in the industry for only a few hundred dollars.

No. 5 - Possible Long-Term Payoff

Like a top company that produces profits and pays dividends year after year, a successful entertainment industry offering can have a very long shelf life. Consider the musical "The Fantastiks." First produced in 1960, it became the longest-running musical in history, with more than 17,000 performances. A revival continues to run off-Broadway, and regional productions are consistently mounted. For a modest investment in 1960, investors are still receiving quarterly checks today. 

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