The Business of Movies: Risk and Return

04/21/2015 07:47 pm ET | Updated Jun 21, 2015

As I wrote in my first blog, I'm associated with Wen River Productions, founded by director James Fargo (whose films have grossed over $800 million) and partners in California and which is developing a major motion picture, Under The Shadow, set during the Second World War.

True facts: American films about military action have a good track record of profit at the box office:

1. American Sniper - $350 Million (Final Estimate)
2. Saving Private Ryan - $276 Million
3. 300 - $211 Million
4. Pearl Harbor - $199 Million

True fact -- The Completion Bond: Wen River Productions will obtain a completion bond which insures the investor that the film will be finished so the investor will have a product to sell.

But, true fact: that does not detract from the high risk that is inherent in investing in a film. The costs of Under The Shadow are in line with the costs of the films cited above, but no person should consider investing in a commercial film unless they are capable of absorbing its loss, and Wen River Productions will take the precaution of ensuring that you have been advised of your risk, and understand it fully.

This is the harsh -- but straightforward truth -- of the film industry. In my next blog, I'll address marketing and public relations, distribution concerns, and the importance of ancillary markets which has been carefully plotted out to maximize the potential of "Under The Shadow." as a blockbuster.