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How low budget, high return horror movies will disrupt the Australian movie industry

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Jay Grant

With its team having been a part of movies returning profits of 220% to 439%, disruptive Australian film production company, Reel House Productions, is gearing up for its next expansion phase where it will capitalise on Hollywood’s massive content supply shortage, driven by the multi-billion dollar demands of streaming giants like Netflix, Disney and Apple.

To finance these expansion plans, the company is giving everyday Aussies the opportunity to break in to the highly profitable global film industry when it opens up to investment through equity crowdfunding

The company will take advantage of major film industry trends by implementing innovative production and sales practices. Its goal is simple: To benefit its shareholders by producing consistent returns whilst greatly reducing the risks associated with film production.

What is Reel House Productions looking to achieve?

“Reel House Productions will lead a new golden age in Australian cinema,” said Jay Grant, Partner at Reel House Productions. “Technology is causing major disruption to the $68bn film and television business and our unique business model is set to capitalise on this trend, unlike any Australian production company has ever done before. The financial weight in the film industry has now shifted from cinema and broadcast television to online streaming. 

“There is currently an ‘arms race’ between the streaming platforms Netflix, Amazon, YouTube and the established film industry studios such as Disney, Sony, Universal, Paramount and Warner Brothers. Each are desperate for high quality, affordable content to attract subscribers. Apple has dedicated US$6bn for content to support its new streaming service, Disney is spending US$24bn on content and Netflix is set to spend US$15bn on more than 300 projects this year (source).

“We will fund, produce and distribute our own movies, cutting out the middle man, which saves vast sums of money. Reel House Productions will produce a slate of low budget, high quality movies using economies of scale during film production – i.e. sharing film sets, production equipment and crews; with only the actors needing to be swapped out. We will produce and sell a slate of 6-8 movies on a rolling 12-month cycle using this business model, all based on genres proven to give high rates of return.”

Reel House Productions business model will share many similarities to Horror genre specialists, Blumhouse Productions, which has achieved super-sized returns on very low budget films such as Paranormal Activity and Insidious.

Blumhouse is famous for developing high quality films for 70-80% less than typical Hollywood studios with identical project parameters. Its breakout hit Paranormal Activity was made on a budget of $15,000 and grossed $194 million. While hits like this don’t happen every day, Reel House Productions’ team already has an enviable track record of making low budget, highly profitable movies.

Geoff Moore, Tony Nikolakopoulos and Jay Grant

What has Reel House Productions achieved so far?

Its team have been key members of previous productions which have returned on average 230% for Action films, 439% for horror films, and 220% for documentary films. Using this experience, the Reel House Productions team expects revenue returns from its future slate of films to be in the vicinity of 230% for Action, 250% for Horror, 230% for Crime Thriller and 200% for Documentary, based on very conservative estimates.

According to veteran actor and Reel House Partner Tony Nikolakopoulos, the days of successfully investing in the standalone movie model in Australia have passed (i.e. cutting through the red tape of film finance corporations, being told how the movie should be made, with little, if any financial gain).

“Trying to replicate Lantana, Animal Kingdom, Rabbit Proof Fence, The Boys or Snowtown is not the future Savvy production houses should be making a slate of low budget, high return movies more like Split, Saw, Paranormal Activity, Unfriended, or Get Out. The slate system that we will be pioneering in Australia prevents the downside of movie financing from being as steep as it often is for movie investors. This is a more secure way to attract investors.”

Reel House Productions is projected to achieve a strong EBITDA margin of 44% in year one growing to 59% in year six. The business is projected to achieve revenues averaging $15.8m per annum over its first six years with revenue in year one of $13.9m. The business is projected to achieve a Net Profit After Tax (NPAT) margin of 33% in year one, growing to 45% at year six. The book value of the company is projected to grow to $50m by year six. This is the benefit of the production company retaining ownership of the ‘vault’ of content it creates.

The company is a joint venture of Australian and US filmmakers with more than 150 years of experience between them. Together they have played multiple roles in the film production process from writing to camera work, cinematography, direction, line producing, treasury, editing and post production mixing. 

“We can build a vault of great stories quickly due to our partnerships in America,” said Jay Grant. “We have hundreds of stories good to go thanks to Reel House Productions’ relationship with Joe Lansdale, a prolific novelist and screen writer who specialises in Crime Thrillers and Crime Noir.”

Reel House Productions will host its equity crowdfunding raise through Birchal.com with investors able to own part of the company for as little as $200 and up to $10,000 for retail investors. Investors will receive ordinary shares in the company and also money can’t buy experiences such as exclusive film merchandise and memorabilia, extra roles, and VIP invitations to Premieres, set visits, wrap parties and special cast and crew screenings.

To receive a copy of Reel House Productions’ full Offer Document detailing the specifics of this raise and the company business model, please visit Birchal.com. (https://www.birchal.com/company/reel-house)

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