Content as a viable investment vehicle
Investment gurus have taught and continue to teach about the indicators that can help identify good investments. Over time, a comprehensive list of some of these indicators has been passed on to new investment initiates; a list that includes hedge against inflation, yield, and returns, risk level, liquidity, Concealment from Tax, etc.
Yield and Returns
For an example of the potential for yield and return, according to Wikipedia, the production budget for the movie Living in Bondage II was NGN 10,000,000 while the gross revenue at the box office alone was NGN 168,000,000. This represents 1600% (approx.) return on investment from 1 channel of monetization and surely, there are other channels and that is why now more than ever, content in any form, is highly valuable — because of the different opportunities to monetize.
Hedge against inflation
Surely there’s a hedge against inflation because it would still cost the same amount to pay for production services (nobody got a pay raise because of the rise in inflation) and so the selling price is highly unlikely to change. To drive this point home, note how the inflation hasn’t affected the cost of streaming subscriptions on your favorite OTT app.
How come Nigerian investors from all cadres have largely overlooked content as a viable investment instrument then? RISK — surely this comes to mind!
Rethinking approaches to investing in Content
Yes, one can argue that there have been huge investments in content, in the past, that didn’t yield. This argument wouldn’t be entirely false however it should be noted that in most of those instances, the actual investment usually would be in an organization or platform as was the case when Verod Capital invested in Spinlet.
Needless to say that we have to rethink the approach, making Content itself the primary instrument that’s being invested in. I mean, one wouldn’t have to buy a manufacturer to invest in transportation. Why then do we think that to approach investing in Content, we have to purchase the platform or the company, or even sign the artist, etc?
Proposed approach
Due to the fact that Content is an intangible good/commodity, we tend to approach decisions relating to it from a sentimental perspective whereas
Data and analytics should be at the heart of every decision around content investment. Ideally, the services of an analyst would be required. The ideal analyst will be someone with a good understanding and appreciation for the content, combined with strong analytical capabilities.
They can then help identify content opportunities that can represent a viable investment.
Structuring the deal is another factor that should be considered. Understanding the distribution/monetization possibilities around the content under investment consideration will also allow investors to make better decisions.
There are several ways to structure investments including Joint Ventures with the content creator where Investors’ Capital goes into Marketing while the creator provides the content that meets Investors’ set standard; Outright investment in the production of content is also possible. Etc.
Team setup
In these instances, the services of a marketing agency as well as an Intellectual Property/Copyrights Lawyer should be engaged to identify the best approach to structuring the deal.
This flexible approach to investment in content will also allow for budget control and oversight as the tenure is finite, at least as far as the expenditure phase is concerned.
One investment that would be interesting to consider under this lens would be
Kupanda Capital’s recent investment in Mavin Global. While it is rather early to call, there’s been 1 commercially successful project — Rema, and a slew of other marginal projects.
Mavin’s marketing capabilities however put them in better stead to succeed — a factor that must have definitely been considered in making the investment because the PR announcing the investment contained details like Youtube total video views, number of subscribers, etc.
