Prynce Productions is a video production company dedicated to the art of meaningful visual storytelling and the beneficial impacts of film production on communities and the environment. The brainchild of experienced writer Alyxandrya Prynce, Prynce Productions focuses on the ability for quality, award-winning films to generate profits for shareholders while simultaneously using their massive economic impact to benefit the workers and communities involved. With the need to film at various locations throughout the year, Prynce is planning to distribute these impacts nationally, even globally, in order to increase our altruistic footprint and make a tangible impact across the globe. Whether it is improving local heritage sites, stimulating the economy of a neglected community, or ensuring diversity in the film industry, Prynce plans on leaving a legacy of economic activism while creating a catalog of award-winning films for future generations to benefit from. Our Mission
Unlike most production companies, Prynce plans to balance our pursuit of profitable projects and activities with the potential for a long-lasting and positive impact that we can have on communities and workers all over the nation (and globe). The film industry can be a lucrative one and creates powerful economic engines that have the ability to transform the locations and workforces utilized in production. With this knowledge, we plan on leveraging our economic power in order to leave long-lasting improvements on those we come into contact with. Some of our major initiatives will include:
Leadership Development: This includes ensuring that future generations are equipped for high-level film industry work and carry on the legacy that Prynce plans to create. One of our biggest focuses will be enrolling underprivileged high school students in film projects as a way of earning college credits and gaining hands-on industry experience.
Community Development: While most studios focus on shooting at the locations that will benefit the company the most, we want to use our influence to benefit communities as well. This includes biasing our location decisions towards areas that can use the influx of cash and economic boost that filming provides. Considering that our projects may be in principal production for several weeks, or even months at a time, this creates the opportunity for underserved areas to benefit from the economic stimulus created by such a large project. We also believe that there are many ignored areas in the nation that will provide amazing cinematographic opportunities due to their natural beauty and character. We hope to be able to display this character through our art.
Environmental Restoration: One of the activities Prynce plans on engaging in is investing in the restoration and revitalization of local heritage sites, environmental works, and natural surroundings in the areas that we shoot. By giving back to the areas that we shoot in, we hope to leave a long-lasting positive impact as we produce works and to create a brand that is known for giving back where it counts the most. Channels
Our efforts will be focused on distributing our projects via theater, streaming, and in-house platform in order to diversify our audience and increase the potential revenue streams we can collect from. Like our regular operations, our choice in theater selection will also be done with a focus on helping struggling or underperforming venues. We will also be seeking distribution with the big-chain theaters in order to increase exposure and profitability. Streaming is expected to be a major source of distribution as the popularity of such channels continues to grow at a rapid pace. Our actual production strategy will take into account audience behaviors in regard to different video platforms and genres in order to optimize our returns and ensure the most effective investments made during the first few years of operations.
In addition to video streaming platforms and theatrical releases, Prynce will be focusing on creating an in-house platform that allows visitors to pay for access to a video or show. The actual cost will be modest in order to compete with popular platforms such as Netflix and Amazon Prime but will seek to generate another revenue stream and attract loyal viewers as our library grows over time.
Industry Analysis
Streaming has undoubtedly grown to be one of the most popular methods of consuming entertainment, with hundreds of millions of subscribers and more than half the US population streaming videos. At the current rate of subscriptions, and the decline in traditional paid TV services, pay-TV households will be lower than the number of non-pay (streaming) TV households for the first time in less than a decade. More than half of these streamers watch between 1 and 10 hours per week, with the top 4% consuming over 60 hours. The prevalence of streaming is higher with younger generations as well, indicating the continuing popularity and dependence on streaming over the upcoming years. Without a doubt, being able to distribute projects through streaming sites (the big four being Netflix, YouTube, Prime Video, and Hulu) will be a valuable strategy for any production company.
In the span of fewer than two years (November 2018 to March 2020) the percent of people that strongly or somewhat preferred theater over streaming went down by 16%, while those that preferred streaming went up by 20%. The number of people that had no opinion or weren’t sure also went down by 4% in that time, showing more consumer confidence and late adopter use as the market acclimates to streaming services.
Despite this, however, the number of movie theater tickets sold, as well as the total box office numbers (adjusted by inflation) has remained relatively stable over the past two decades. Audiences may be spending more time streaming videos and may prefer the convenience of streaming over theater attendance, but this isn’t stopping them from choosing to go to the movies to see the latest blockbuster. Unfortunately, this is only good news for the blockbusters.
In fact, only 4% of all films released theatrically accounted for over a third of all revenues and audiences. Per capita, there has been a 28% reduction in attendance in North American cinema (with the average person going to the theater 3.5 times a year in 2018 as opposed to 5.2 in 2002). So, while overall, cinema attendance may appear to still be healthy, it is really only a handful of hi-fidelity, blockbuster budget movies that are driving this attendance and revenue. Independent films and those with lower budgets will inevitably have a harder time gaining attention in American cinema as streaming continues to take over.
Box Office Genres
A study of the top-grossing genres in North America (by box office revenue) reveals the popularity and lucrativeness of adventure and action movies, which bring to mind hits such as Avatar and the numerous, wildly popular superhero movies. The success of these movies and the profits gained fail to tell the full story, however, with most of these releases requiring huge budgets and attracting a lower-than-average ROI (despite their astronomical revenues).
When analyzing the performance of genres by return on investment alone, indications of the most profitable option differ from those decided by box office revenue. Several research studies have cited documentary and horror films as the most profitable movie genres to produce, with returns as high as 2500% on average. According to a popular New York Times study that took into account the box office ROI of films between 2003 – 2012, the average movie earned 452% of its original budget. As can be seen in Figure 7, documentaries earn much more of a return than this (over 1000% domestically and over 2500% globally). However, the same documentaries in this study earned $24M on average at the box office, compared to $200M for action movies. As noted earlier, however,box office numbers and becoming less relevant as streaming continues to dominate entertainment consumption.
Streaming Genres
A look at major streaming development strategies may also reveal not only which genres are most popular amongst streaming viewers, but which may also have the highest chance of being purchased by these platforms. A study from late 2018 shows how Amazon and Netflix were both focusing on the development of upcoming content by genre, revealing certain similarities as well as differences between the streaming giants. For both platforms, Sci-Fi/Fantasy were prevalent genres, taking one-fifth of their development budget. Netflix seemed to lean more towards comedic releases, however, while Amazon placed a greater emphasis on drama. With the addition of Disney+ and the growth of additional streaming services, there may be additional opportunities to sell specific genres of shows and movies. However, an analysis of prior genres released on streaming platforms (as well as overall preferences of movie audiences) shows that drama, comedy, and sci-fi/fantasy will continue to have a home on streaming platforms.
Other studies back up this sentiment as well. A mid-2019 study amongst TiVo users in the US and Canada show that comedy and drama are both the preferred genres for TV viewers. Comedy especially is popular amongst TV viewers, with over 60% of those surveyed responding favorably.
Market Analysis
Our marketing and production strategy will consist of focusing on producing works that have a greater return on average and are in demand for both theatrical and live streaming releases. According to an analysis of movie streaming and box office releases, the most profitable genres to focus on will include documentary, horror, drama, and comedy. Attaching science-fiction/fantasy themes to these projects may also increase potential engagement with streaming sites. While Prynce eventually plans to expand to a wide variety of genres, having an initial focus on low-cost, high-return productions will increase our chances of seeing sustainable cashflow early on and gaining the traction needed to invest in riskier or more expensive projects. Each of these genres will be advertised based on the expected demographics of viewers.
While all movie genres have a mass appeal to all genders, ethnicities and age groups, and have historically found success with a wide audience, tailoring advertising efforts to specific groups may help to increase the return on marketing, and ensure an efficient and management ad budget. These efforts may include targeted social media ads, trailer releases, events, networking, select showings, and traditional advertising methods.
Financial Plan and Development
Our initial funding target is $250,000 for startup working capital needs, as well as financing for the production of projects (with a goal of between $1M and $3M per project). For our initial releases, we will be aiming for the production of 3 projects, with a budget of $1M each. For the purpose of forecasting, we will be estimating our production cycle (the period from when development on a project begins to when distribution concludes and the project is ready for release) to be 15 months.
Development will include the creation and finalization of scripts, as well as the creation of a budget and schedule for the project and any preliminary planning. Pre-production includes all casting, scouting, set construction, and preliminary production, while principal production includes the actual shooting of the project. Post-production consists of all editing, music scoring, and release preparations. Distribution for the purposes of this analysis will include marketing, negotiation of distribution deals, attendance of film festivals, and any other actions needed to ensure a receptive public release of the project.
The budgets for each project will be split on average according to the projections below (see Figure 15), with just over two-thirds going towards distribution and pre-production. This is due to the expected high cost of marketing effectively, as well as the expected costs of the project to be incurred before production (including earmarking salaries, licenses, materials, equipment, and most of the costs of production). The remaining budget will support development, principal, and post-production. There is expected to be some variance in these percentages depending on the project needs.
While the average box office movie sees a 452% return on investment, our target will be a modest 150% return on projects. Profits above our initial investments will be put towards future projects, as well as the cost of operations. At this rate (and not including any additional financing rounds), we expect our annual project returns to be as follows:
With continuously positive returns, however, it is very likely that Prynce will be able to attract financing for additional projects, increasing the number of annual releases to double digits before the end of five years. It is also possible that returns may be higher than projected, resulting in the ability to finance a larger number or bigger budget projects.
Cash Flow Needs
Although Prynce is expecting positive returns on its projects and activities, the fact that these projects will not see a return on investment for over a year will place some demands on the company that will need to be met with financing. According to our production schedule, our releases should net a return by the fifteenth month since it was initiated. For conservative purposes, we will assume that none of the profit is gained (either through theatrical releases or streaming deals) until Month 15. This will be 3 months after the initiation of the next fiscal year’s projects, right before pre-production begins.
Adjusting the above numbers to reflect these changes in cash flow expectations, we can analyze the actual financing needs of the company in order to continue operations without issue.
(Example is low end of the budget. Some movie budgets range higher, closer to $4 - 5 Million.)
As can be seen in the chart above, the company will need a cumulative $4.42M in order to support the expected rate of growth for the first three years. As previously projected, however, net profits are expected to be generated after Year 3, which can support investor dividends, additional projects, company expansions, and other capital investments.
Conclusion
In conclusion, by diversifying our initial portfolio to include genres that have historically done well on both streaming platforms and in theaters, as well as the channels we choose to distribute our projects on, Prynce will have the highest chance of building a sustainable cashflow early on that will allow us to expand and invest in even more diverse works in the future. These initial genres to focus on should include horror, documentaries, comedy, and drama. In addition to developing works for other channels however, we will also be focusing on creating our own platform in order to have more freedom and autonomy in our future direction.
With a budget of $1M per project and an expected release of 3 completed projects by Year 2, we will be looking for financing to the amount of $4.42M, in addition to a $250K startup investment, ($4.67M total) which is expected to support growth and the addition of more projects until the company is cashflow positive by Year 4. From our initial launch, and throughout our continued evolution, Prynce plans on focusing our energy and operations on making meaningful impacts in the communities we serve in order to differentiate our brand and leave a legacy of empowering and strengthening the underprivileged and underserved all over the world.
