Receivables Finance for the Film Industry: An Opportunity Well Worth Entertaining

  • Wayne Marc Godfrey, Founder and CEO at Purely Capital

  • 16.07.2021 12:30 pm
  • #Investment #

Business is booming in the film and TV industry, with global streamers recording double-digit growth in terms of total spend on content and average programming budgets since the beginning of the pandemic. Spending from these platforms on producing and licensing new entertainment (excluding sport) exceeded $220bn in 2020.

Given these impressive new statistics, it may come as a surprise to many of us who have been binge-watching during lockdown that the producers of this content are not necessarily reaping the rewards of this growth.

Indeed, with the way the industry works, streaming giants such as Netflix, Amazon, or Disney+ typically pay production companies on a quarterly basis over the duration of the license period, so businesses can be left waiting to be paid in full for as long as five years.

This is why the entrance of receivables finance into the industry has the potential to drive such seismic change.

Film Finance: “The Need For Speed”

Long-dated payments place considerable financial pressure on producers and distributors. But receivables finance companies such as Purely Capital, who purchase contracted revenues from content providers, can help to bridge this funding gap and deliver vital immediate cashflow to creatives and rightsholders.

This benefits producers and distributors fundamentally by saving them time. They no longer need to liaise with major global businesses' accounts departments or wait for the funds to kickstart their next production or acquisition projects.

Time, in a very real sense in the TV and film industry, is money. So, streamlining years-long payment processes into a matter of days, via an automated, fully transparent platform that provides real-time reporting such as ours, can give a momentous boost for the creative arts. 

This introduction of receivables into the entertainment industry is particularly good news for smaller, independent production houses, as streamer spend on independent content increased by 25.3% in 2020 – considerably higher than the global average of 16.4%.

Growth gathering momentum

On top of the $220.2bn global spend in 2020, production and programming expenditure from the streamers is forecast to surpass $250bn this year, proving once and for all that the global pandemic has not been bad for production. These figures were highlighted in a report from Purely’s new research arm, Purely Streamonomics, and include forensic analysis of filings from the US SEC. 

Streamonomics’ research strongly suggests that the industry still has plenty of growth potential, powered by continued SVOD roll-out and budget-boosting factors such the competition for talent exclusivity and the need to deliver lavish, impactful shows to act as subscription-drivers to platforms. These trends are not going anywhere soon.  

Moreover, the increasingly environmentally conscious industry is likely to see budgets hiked a further 5%-10% on “green production initiatives” alone, as demand increases on making the creative process as sustainable as possible. This too is a pattern that will only become more pronounced in the coming years.

Despite the enormous amounts currently spent on content, therefore, there is plenty of evidence indicating that today’s film financiers will see their ROI grow healthily in the long term.

Investment opportunity

And so back to the change which is afoot thanks to receivables finance. Established institutional lenders have already begun to take note, with historic private bank Coutts among Purely Capital’s financial backers. Those able to move swiftly into this exciting new space will reap the rewards of a traditionally untapped area of potential.

Content is being created at a pace, scale, and quality never seen before, but the producers of this content need support from receivables financiers so they can reap the benefits of their work just as streaming platforms, broadcasters, and, of course, audiences do.

The key to unlocking these benefits lies with new lending platforms capable of oiling the wheels of the payment process, and they too are set to grow significantly alongside the post-pandemic entertainment industry.


Other Blogs