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Meeting with the movie production company about the Warhunt movie
Some time after the interview this summer, Crowdestor called me, as I had told them that I would like to look more into how they work on a day to day basis. They invited me to attend a meeting with the Warhunt movie production company together with them, to talk about the upcoming movie project that they revealed to me during the interview at their office in Riga. It was really good to see how many details Crowdestor wanted from the production company before even considering moving on with the project. Crowdestor wanted track records and budgets from other similar projects the production company had done in the past, information on potential actors, producers, movie rights, best and worst case scenarios and how to handle the different outcomes. We also viewed a theatrical trailer for the movie. Crowdestor also asked about the contract with the Asian market to find out how much of the production cost was already covered by the buyers. After hearing what was already covered by the pre sales contract, it did not seem as such a risky project as I first had imagined. This meeting gave me a good insight into how Crowdestor work with these new exotic projects.
Some more details about the Warhunt movie project
This is some of the information that was shared at the meeting. Now I share it with you. Since the meeting some things may have changed, so none of this information is set in stone. You, of course, need to look into the newest information that Crowdestor puts out. Remember that the percentages discussed in the meeting may not be the same as the final agreement. I assume that Crowdestor wants to get a cut as well and numbers could have changed as all contracts with directors, cast and crew were not in place at the time of the meeting.
The movie production company is based in Riga, Latvia. Historically, they have been delivering production services for many years, but about 3 years ago they switched into producing movie by themselves. So they switched from delivering services to other producers to producing movies with their own funds and sell the movies produced to the international market, specifically to the US market. They have successfully sold their previous movie, called “Welcome to Mercy“, to the US. It is a horror story with a 1.7 million euro budget.
The Warhunt movie project, that they want Crowdestor to help fund, is to be produced this year and next year during the winter in the forest outside of Riga, Latvia. According the the theatrical trailer it is a horror movie taking place during the 2nd World War, where soldiers are attacked by witches in a forest. There will be a lot of special effects and the director is known as a visual artist and an expert in special effects. He has been working on some very well known movies in the US.
The Warhunt movie is also to be sold to the US market. The project has a 1.65 million euros production budget and they are looking for an equity investment of 1.5 euros
Movie projects is very unknown territory for investors, but the production company says that they have a lot of experience with low budget horror movies and they know that this particular genre has a very good historie of recouping the money invested and make a good profit. A fellow investor gave me this link about movie production specifically in the horror movie genre and it is a really interesting read, if you are thinking about investing in the Crowdestor Warhunt movie project. Thank you so much for the link, Fleur.
What is special about the Warhunt movie project is that the movie is already sold, meaning that they already have a presale agreement signed with an international distributor of 1.150.000 euros. That means as soon as the movie is ready, they will get a big portion of the budget back at the moment of delivery.
So they don’t have to search for the potential buyers. The main revenues will come from the US market. They also have a deal with a distributor on the chinese market to sell the movie there as well. They could also sell the TV rights and the rights to make a chinese version of the movie.
There are several scenarios on how well the Warhunt movie could do. The most positive one would be if the movie goes the movie theaters and the most negative scenario where it would go only to the limited video on demand platforms. They always do a calculation of the earnings in the worst case scenario and with the presales agreement in place, the production company would be able to recoup the invested fund plus a 20% premium in the worst case. In the best case scenario investors can double or even triple their investment. There is of course another risk. That is if the production company runs out of money during the shooting of the film, before it has been finalized. Because you cannot sell a movie that has not been finished. So the cashflow for the production needs to be strictly controlled.
They way it usually is set up for a movie production, is that a dedicated company, an SPV, will be created and it will be assigned the already signed pre sales agreement. The SPV will be a European company but based outside of Latvia. Crowdestor would be shareholder in the company to get the full insight. The investors funds will also go to this company that will also own the movie rights. This is a standard setup in the movie industry. When the profits will be split up, the invested money and the additional 20% will be earmarked for investors. After that the remaining profits will be split on the talent pool of actors, directors, and investors. The proportions are different. Investors get the premium of 20% and the possibility of an additional 30% of the revenue split. 40% goes to the talent pool, and 30% goes to the production company.
The typical production period is 8 months, where 2 months is the pre production period, 1 month is the shooting period, the rest is post production for the editing, cutting and the visual effects. 75-80% of the funds will be used in preproduction to get everything ready for shooting and also due to the fact that when american actors does business with an eastern european production company, they will want the payment up front. The Warhunt project could be split up and several stages or projects on the Crowdestor platform, when the funds are needed.
They main benefit of producing a movie with Hollywood actors in Latvia is that the production costs are 1/5 of the cost in the United States. Even though it will be the same quality and with the same actors. Riga is also a smaller city so it will be very simple and easy to close down roads for shooting for example. The old city of Riga is also historical and could very well look like a city would during the second world war, as there are not really a lot of modern buildings in the old center. In the US they would also need additional insurance and pay union fees on top of the higher production costs. Usually the production company will hire an american director and cast 2-3 known american actors. The rest of the cast will be british or local actors. The crew is local as well. But the result will look like an american made movie.
The actors and director that were discussed during the interview, I can still not reveal. As I am not sure the contracts with the actors or director have been finalized it could result in me hurting Crowdestor‘s business and the Warhunt project if I revealed it too soon. Normally the contracts will not be finalized until the production is fully funded. So I will let Crowdestor themselves reveal this information when the time is right. But I can say, that if it will be the two actors we were talking about, then I will feel secure in my gut that at least the money invested can be recouped. The potential lead actor is well known and I think he would fit very good in the lead role.
Here is the information about the Warhunt project, currently available on the Crowdestor website.
MINIMUM INVESTMENT: 50 euros.
FUNDING TARGET: 800.000 euros or minimum 400.000 euros.
In my opinion there is no question that the high target of 800.000 will we funded quickly though.
When will the project be available for investors on the Crowdestor platform?
The movie project will open for funding tomorrow at the Crowdestor platform. So if you want in on the project I hope this article gave you a little more information so you have time to think a little before you invest. Their funding target is 800.000 euros, but I am sure that it will be funded fairly fast. So I hope this article helped you get a little more time to really consider if it fits your risk profile. You will also have time to transfer money to invest. Remember that you can be a part of this movie production for just 50 euros. If you like these small articles I make beforehand about coming projects before they are launched, please leave a comment and let me know. Invest carefully, fellow investors.
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