When you look at a list of the world’s most precious companies, it is no surprise that brands like Apple, Microsoft, Google, and Coca-Cola top the list. However, You do not have to scroll down any further to see Disneyprobably the most famous and revered film studios in the world.
After all, global box office earnings for films released in every country all over the world reached $36.4 billion last year. What’s more, the number of cinema screens increased 6 percent worldwide in 2014 to more than 142,000.
Therefore, it’s fair to say that there are numerous investment opportunities for film studios to take advantage of stock and stock trading. But how do major blockbuster releases affect the market? To explain the numbers behind the silver screen success, we speak to Chris Beauchamp of spread betting and IG CFD trading company and Derren Nathan, principal analyst at Hybridan.
The importance of Hollywood blockbusters to film studios
Despite the undeniable fact that consumers are turning their attention to other forms of entertainment such as video games, online content and on-demand streaming services, watching a Hollywood blockbuster in theaters remains an unparalleled experience.
For a while, it seemed that fears of copyright infringement and film piracy would significantly reduce profit margins for film studios. However, in last few years, Hollywood blockbusters have proven why they remain at the forefront of immersive entertainment.
“We’ve actually seen a number of blockbusters come out over the last few years that revived the fortunes of film companies that were looking a little weak; and big names are really reviving interest in cinema and confounding expectations that cinema will actually continue to lag behind other forms of entertainment,” notes Chris Beauchamp, Senior Market Analyst at IG.
Hollywood blockbusters not only provide lucrative financial returns for film studios, they also provide the means to produce more unique films.
“Blockbuster provided funding for more speculative films that were not expected to be successful – like Up! and Frozen – but actually got really big,” adds Beauchamp. “But that kind of small business is what it takes to try to make a more attractive profit.”
Take advantage of the influence of the film industry on the market
When it comes to supporting film studios from an investment perspective, Beauchamp believes one company stands above the rest. “It really continues to be Disney, its strong stock performance, decent valuation and strong financial strength makes it stand out from most of them,” he said.
But in addition to supporting Disney-produced films, such as the latest installments of the Star Wars franchise, the industry’s rise means that investors should also consider putting money behind distributors and studios as well.
“The Force Awakens wasn’t the season’s only blockbuster, you have Specter, which did quite well at the box office, but Everyman Cinemas and Cineworld said they were expecting good turnout in this second half. this year,” Nathan noted.
“For the studio itself, Pinewood, it is a really good profile for them. Great UK establishment, they’re really looking outside of the UK, they’re looking to buy studio assets in places like Chile, and they are expanding their actual main studio because they’re experiencing such huge demand for production.
Therefore, big blockbuster movies carry financial impact. They improved studios and cinemas and provided jobs for the numerous companies that needed to take them from script to screen. Plus, a terrific Hollywood movie can boost a country or region’s tourism industry – just look at New Zealand’s interest in the adventures of Lord Of The Rings and The Hobbit in Middle-earth. There’s nothing like an inflow of tourists to boost a country’s economy and market – meaning the impact of such a film has a ripple effect across multiple markets.
