How to earn up to 18% returns by lending to movies sold to OTTs?
There are several unique investment options being floated in recent times. Earlier CredMint was offering 9% returns through P2P lending. WintWealth platform offers various secured and senior secured bonds and offering 9% to 11% returns. Recently, I have seen one advertisement about an investment option offered by Betterinvest club where one can lend money to movies sold to OTTs and earn high returns up to 18%. In this article, we would details on How to earn up to 18% returns by lending to movies sold to OTTs?
Also Read: How Smallcase Investments work exactly?
What is revenue based financing in movies?
Movie production houses receive payment from OTTs (Netflix, Amazon Prime and Zee5) only after 30 to 90 days post movie release.
To bridge capital requirement, movie houses sell their OTT invoices (future cash flows) to lenders.
Investors can lend money to movie production houses for their capital requirement based on their future cash flows.
OTTs would make the payment directly to lenders.
This is similar to invoice discounting, however the partners here are movie production houses and OTTs.
How does this exactly work?
Step-1 – Production house would sell movies to OTT’s confirmed with future cash flow via invoices.
Step-2 – Production house sells this invoice at a discounted price to investors.
Step-3 – Investors would receive the amount directly from OTTs in 1 to 6 months time frame.
Positive Factors in this alternative investment option
Here are some positive factors.
1) This investment option provides 12% to 18% returns in the short term.
2) The amount is paid directly by large OTTs to investors, hence considered as moderate to low risk investment option.
3) One can lend as low as Rs 1 Lakh, hence even small investors can afford to invest.
4) Since betterinvest club lists opportunities only which are selected by the OTT platforms like Amazon Prime, Netflix, Zee5 and Hotstar that are almost completed, the risk of movie completion is removed.
5) Investors also get access to attractive perks like move merchandise, exclusive events, movie tickets and vouchers.
6) The returns are paid only after deduction of tax, hence there is no further tax implications for investors.
Negative or Risk Factors in this investment option
Here are major risk factors.
1) There are several platforms which are now offering such alternative investment options. However, one need to carefully choose the genuine platforms. Betterinvest club is relatively new platform as of now.
2) These investments are used for movies which are completed and sold their internet rights to OTTs. However, in case for some reason, OTTs cancel their agreement with movie production houses, the amount invested would be at risk.
3) While the invoices are confirmed by OTTs, there could be a delay in payment to lenders.
How to invest in this plan?
You need to visit betterinvest club platform and register for early bird access. They would review and provide the access and list the opportunities as and when something arrives. You can select the opportunity and transfer money.
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Lending money to movies sold to OTTs – Is it safe investment option?
This investment option is currently offered on betterinvest club and soon would be available on other platforms too. While the money is paid to movie product houses, these are against confirmed invoices from large OTTs. This investment option provides high returns of 12% to 18%. There are few risks like delay in honouring the invoices, new platform (it could be riskier) etc., Investors should consider all these risk factors before investing in such investment option.
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