You Never Know When Your Number’s Up!
Global box office for all films released around the world reached $36.4 billion in 2014, up 1% over 2013’s total. The increase was due to international box office ($26.0 billion), which was up 4% from 2013 and accounted for 72% of global box office in 2014. In 2015 the global box office was $38.3 billion (an increase of 8%), continuing its steady rise since 2011 (according to the 2015 MPAA Theatrical Market Statistics Report)…and the trend followed in 2016 with a strong increase increase. reaching $38.6 billion, and in 2017 $40.6 billion.
In 2014, U.S./Canada box office was $10.4 billion, down 5% from $10.9 billion in 2013. However, in 2015 US/Canada Box Office rebounded to $11.1 billion, an increase of 8% over 2014 – and The US/Candada 2016 Box Office reached a record total of $11.37 billion…and $11.4 million (a 2% increase). 2017 MPAA statics should be available in March of 2018.(See reports below.)
Movie theaters continue to draw more people than all theme parks and major U.S. sports combined. In this day and age of instant, mobile, and at-home entertainment, Hollywood and the silver screen still rake in ample amounts of revenue. Without a doubt, there is something exciting and almost sentimental about going to a movie, and the film business is still very much alive and well-entrenched in our culture. However, films are now enjoyed on a multitude of platforms allowing for a longer shelf life providing income down a very ‘long tail.’ … with sales and viewership now including internet streaming, downloads, and watching on mobile devices.
A good article on the reality of film investment may be found on Slated, a film industry site. READ HERE.
Dec 18, 2015, Congress approved a spending package that include a provision to help filmmakers, by renewing the Sect 181 Federal Film Tax Incentive, which expired on December 31, 2016. The code allows investors to deduct their investment against passive income as soon as the film begins production, then later claim any returns as income in future year (limited by passive income rules). There are limitations and a potential investor should consult their own tax adviser. MegaBall$ complies with the requirements of the film: 75% must be for paid service in the US, and our project is 100%, and has qualified to be grandfathered in. Even thought Sect 181 has sunsetted, investors in MegaBall$ retain the tax advantage.
Here are a few links to read more about Sect 181 and the tax implications:
Marc Jacobson (Entertainment Lawyer) Tax Implications of 181
Sect 181 Explained
Sect 181 Simple Breakdown
Oroloro may publicly solicit accredited investors in compliance of SEC Rule D Section 506c. We accredited investors will take into mind these tax implications and consider investing in MegaBall$, which has solid commercial appeal.
Please note: Sect 181 sunsetted on December 31, 2016. MegaBall$ has met all the requirements to be ‘grandfathered’ into the incentive; Investors in MegaBall$ retain the benefit of Sect. 181, and may deduct investments in the film even though Sect 181 has expired. We recommend that investors check with their tax advisers regarding the potential benefit of Section 181.
But wait – there’s more!
Effective January 1, 2018, there are two more film-TV-stage tax incentives. Sect. 168 allows the investor a 100% depreciation loss/deduction in the year the project is placed into service (the year the film is first shown). Sect 199a provides a 20% discount on taxable income returned to the investor. For example, for every taxable one dollar returned to the investor, the investor pays tax on 80 cents. Please note: 181, 168 and 199a may not be combined.
But wait – there’s still more!
In New York State there film incentive rebate, returning 30% of qualified spending, which in the case of MegaBall$, would be slightly over $500,000. When combining the benefits of the NYS rebate and Sect 181 (or 168), the investor has a greatly reduced financial risk.
Two recent statistical reports about film as an investment provide very encouraging news..and should be read by potential investors.
The first is the MPAA 2015 Theatrical Market Statistics Report. It clearly demonstrates that worldwide box office sales have increased 9% over 2015, and have steadily risen 18% since 2011. More importantly it shows that the US box office sales have reached 11.1 billion, an increase of 8% over 2014, which was a down year, and marking an solid increase since 2006, when US sales were $9.2 billion. Movies sell! 2016 has it a record box office total of $11.37 billion! MPAA 2016 Reports. The 2017 reports show a global box office increase of 5% marking a new record in sales.
But the investor wants to know if movies make profits … and according to the April 7, 2016 report by Slated.com, they do! Slated analyzed 1600 films released between 2010-2015, and found that no matter the budget of the film, profit was seen. In fact, it states “The overall investment in film rivals that of Silicon Valley…..When it comes to theatrical releases, it turns out that all budget sizes have shown overall profits.” And then it notes….”that the $5-million-and-under tadpoles almost match the the investment returns of their supersized predators at the box office.“
Read the reports for yourself by clicking on the above links. MegaBall$ has very solid potential, and the revenue projections are available on request.