BUSINESS ANALYSIS: Evaluating the Trajectory of Legion M Projects
Friday April 7th marks the 6 year anniversary of the release of Colossal, which was the first project Legion M ever got involved with. We thought it might be useful to share a little detail about the economics of that project, and compare it to our most recent project, You Can Call Me Bill.
BACKGROUND
To date Legion M has been involved with 9 films that have already been released, with another 4 expected to release in 2023.
LEGION M FILM PROJECTS
Colossal - 2017
The Field Guide to Evil - 2018
Mandy - 2018
Bad Samaritan - 2018
Tolkien - 2019
Jay and Silent Bob Reboot - 2019
Memory: The Origins of Alien - 2019
Archenemy - 2020
Save Yourselves! - 2020
This is Not Financial Advice - Expected release in 2023
Nandor Fodor And The Talking Mongoose - Expected release in 2023
You Can Call Me Bill - Premiered at SXSW, Expected release in 2023
The Man in the White Van - Expected release in 2023
Legion M’s involvement in these films has come in many different forms. We’ve played the role of financier, distributor, marketing/release partner, merchandising partner and producer. While the business model and economics of each of these roles varies dramatically, the one thing that’s been consistent is an upward trajectory – generally speaking, over time our roles within projects have gotten larger and more impactful. Each project is a stepping stone to the next, as we continually level-up to bigger and better roles.
To illustrate, we’d like to compare the economics of Legion M’s first project (Colossal) with that of our most recent project (You Can Call Me Bill).
COLOSSAL
Colossal was Legion M’s very first project announcement, and arguably one of our most important. At that time, Legion M was just getting off the ground. Our first round had SOLD OUT with $1 million raised (the max allowable under Reg CF at the time) and while $1 million is a lot of money, it is not much when it comes to the movie business. “$1 million means nothing in Hollywood” skeptics would say. And they were right.
A lot of people assumed that Legion M would take our money and use it to make the sort of movies we could afford to make – fan films, micro-budget movies, that sort of thing. But that was never our goal. Instead, we were talking to larger companies about how we could get a smaller piece of bigger projects.
Our community was very small at the time (about 3,500 people, compared to over 40,000 today), and completely unproven. But we were fortunate to find a smart and innovative partner in NEON (the distributor behind Academy Award winning films like Parasite and I, Tonya), who was just starting up as well. Colossal was going to be their first release, and they agreed to partner with Legion M.
The deal was simple. We invested a small amount of money (in the range of $50K - $100K) in exchange for an agreement that paid out based on US box office results. If the movie did well Legion M stood to make money. If the movie did poorly, we could lose it all. But the economics were all proportional to the amount we invested, which meant they weren’t all that meaningful.
That’s because in a deal like this the upside is proportional to the amount of capital at risk. If you invest a hundred million dollars and get a 15% ROI, you’ve made fifteen million dollars in profit. If you invest $100,000 at that same rate, your profit is just $15,000, which is not enough to really move the needle at a company like Legion M.
That said, the strategic value of the deal was, well… colossal!. The film helped Legion M show the world – from investors and customers to partners and the rest of Hollywood – exactly the sort of projects Legion M aspired to be involved with. Colossal gave us a theatrical release to rally our burgeoning community around, and allowed us to build a case study that showcased what we could do. As our first project, we knew the value wasn’t the money we made, but the chance to get a foot in the door of an industry that is notoriously closed to outsiders.
YOU CAN CALL ME BILL
If you flash forward 6 years later, Legion M has leveled-up to a substantially larger role with You Can Call Me Bill. This is the first movie that Legion M is entirely responsible for (we developed the idea, drove it from inception to premiere, and own the rights to the final product). It’s also the first one completely financed by Legion M – not with our own cash, but by offering an innovative Fan-First Financing model that fully funded the project in less than four days. This is more than a stand-alone project – it’s a prototype for an entirely new class of Legion M projects going forward.
Strategic value aside, it’s the economics that separate You Can Call Me Bill from Colossal. Unlike Colossal, our return for You Can Call Me Bill is not proportional to the amount of money we invested, or tied to a simple metric like US Box Office. Legion M owns a substantial piece of the film alongside the fan investors and William Shatner. That means we earn revenue from every form of distribution. In every territory in the world. In perpetuity.
As a result, the potential for return is orders of magnitude higher than Colossal. Legion M is still small enough that if You Can Call Me Bill were to become a smash hit, it could single-handedly alter the financial trajectory of the company.
To be clear, the downside is there as well. Every film is a swing of the bat, and it’s still possible that Legion M could end up striking out with You Can Call Me Bill. But in a hit driven industry like entertainment, the most important thing is quality swings at quality pitches. We feel confident that if we can continue getting pitches like You Can Call Me Bill, it’s only a matter of time before we hit a home run.
SO WHAT DOES IT ALL MEAN?
The fundamental challenge of building a startup isn’t identifying a vision for the future, but figuring out how to get there. It’s easy to imagine how an entertainment company with 1 million shareholders can change the world – the hard part is figuring out how to get from 0 to 1,000,000 shareholders. Especially in the entertainment industry, where the economics of upper echelon projects can be vastly different than those of the lower echelons.
Our goal in presenting this comparison is to provide insight into how Legion M evaluates projects, and to illustrate how the power of our community has allowed us to level up to larger and larger deals. There’s no question that You Can Call Me Bill is a better deal for Legion M than Colossal was, but we also believe that You Can Call Me Bill likely wouldn’t have been possible without Colossal. Each project is a stepping stone to the next.
By looking at those two projects – our oldest and our most recent – as benchmarks, the trajectory of Legion M becomes clear. We've gone from putting up cash to take small positions in other people's movies to earning $$ to produce films of our own. We've gone from having to invest to buy a seat at the table...to earning a seat at the table via our in-kind contributions...to getting paid (as producers) to sit at the table.
And the best thing is…we’re still just getting started. While Legion M has been around for just over 7 years now, we’ve raised less than $20MM, which is a tiny drop in the bucket when it comes to making movies. To put it in perspective, Legion M’s entire existence probably costs less than the first 15 minutes of a Marvel movie.
The most important thing for Legion M is what comes next. You Can Call Me Bill isn’t an endpoint, but another stepping stone along the way. The knowledge, experience, and relationships gained from past projects becomes the foundation of those yet to come (including the ones we’re working on today). More importantly, each project (and every passing day) allows us to increase the size of our community, which is the true source of Legion M’s power. The larger we get, the more powerful we become. And if we can continue on this trajectory, there’s no telling how high Legion M could go.
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