The Economics of Hollywood: Funding

The video explains how movies function like companies to raise capital, similar to startups. It highlights the success of low-budget films like 'Paranormal Activity' and 'Super Size Me', attributing their success to viral marketing and the internet. The internet also disrupts film financing through crowdfunding. Big-budget films are often funded by private equity and hedge funds seeking uncorrelated returns. The video also discusses the synergy between the film and music industries, with examples like Sony Pictures and Columbia Records.

Why do movie studios incorporate their films?

• To raise capital

• To avoid paying taxes

• To reduce production costs

• To gain more creative control

What is a common characteristic of successful low-budget films?

• They rely heavily on celebrity endorsements

• They often achieve viral success through the Internet

• They are funded by large corporations

• They are always horror films

Which of the following is NOT a typical investor in big-budget films?

• Private equity firms

• Hedge funds

• Local community banks

• Family officers

How are crowdfunding platforms changing the film industry?

• By increasing the control of studios over film content

• By reducing the number of films produced each year

• By allowing more people to invest in films and earn royalties

• By making films more expensive to produce

What is one alternative funding source for studios besides investors?

• Streaming services

• Merchandise

• Ticket sales

• Paid product placement