The film industry is big business. Not only does it produce a large number of jobs, but a successful film can bring in a huge amount of revenue too. As well as box office sales, a film can financially gain from distribution, promotion, merchandising and technology development, all of which can impact the financial market in stocks, shares and private investments. Here are just three significant ways the film industry influences financial markets.
Movies have a dramatic impact on the economy – in particular, tourism. A popular film can
inspire an audience to visit its location, with the most recent study by the British Film Institute showing that in 2015 the film industry generated over £6 billion, with £400 million of that generated from tourism alone. This just goes to show how much influence film locations have to boost local economic growth.
An example of this can be seen from the touristic development of the Ko Phi Phi Leh area in Thailand. Since Leonardo diCaprio’s ‘The Beach’, the exotic paradise has boomed with tourists wanting to take in the picturesque views of the mountains and beautiful rock formations.
Even television shows can produce economic growth for a country. For example, Croatia and Northern Ireland have seen the benefits of the Game of Thrones series. This is good news, as the more people who visit these locations, the greater demand for trade to support the growth of tourism.
Since the 1900s, the film industry has been boosting brand awareness through various techniques from production to merchandising. But, the most common brand and film partnership is through product placement. You’ll find that this practice is successfully used
in most films. It can be the placement of anything, from actors driving a certain brand of car in a chase scene, to ringing a love interest on a smartphone, or famously, drinking a brand of drink… shaken, not stirred.
Typically, when an audience sees their onscreen idols mixing with the latest products, their natural instinct is to desire said product, even if this is done subconsciously. They may even go to buy the product, boosting share values and the connected financial market.
Investments and trading
Something shaking the film industry at the moment is Disney’s latest big purchase of the rival studio, 20th Century Fox, for £66 billion in stock and debt. This transaction is not just the trading of a studio or company, it’s also the trading of assets, which means all major pictures will now sit under Disney’s control. This could change the approach to filmmaking and distribution as Fox has partnerships in enterprises such as Hulu and the FX Networks. If all production is kept in house, essentially, the shares in Disney will rocket while others may feel the pinch. Investors for Disney will no doubt be pleased by the oncoming financial gain, while offering up a big opportunity for spread betters. The future for both Fox and Disney is exciting, so if you’re considering trading on the performance of the film industry and its associated markets, there are spread betting courses you can take to help you become a confident trader.