Investing in movies has always been viewed as a highly speculative venture resulting in far more bombs than blockbusters. That’s why Maximilian Kogler, co-founder of Da Vinci Media Ventures, said he uses a ‘Moneyball for movies’ approach in order to profit off independent films. Independent movies from $2 million to $40 million in budget tend to make decent profits, according to Kogler. He said the average return for movies in this range since 1996 is about 11.5%, or what he refers to as beta. ‘We apply a venture capital portfolio theory to it, which means we diversify into about 20 movies a year – or beta – and then we eliminate the ones that we think will not make money,’ said Kogler. ‘We don’t try and pick winners, we get to beta and then we eliminate a disproportionate amount of losers because it’s easier to do.’ Kogler said he uses technology to trim off those losers. Da Vinci employs a natural language processing technology to support its script-based algorithms, which are one part of a broader suite of due diligence tools the company uses for its film investments.
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