“Disney’s Folly” — The Difference Between Investing in a Movie vs. Investing in a Studio

 

If you could go back in time, would you invest in one of the most successful movies of all time…or the studio that made it? 

2025 is a big year for Legion M. We had our biggest release (yet!) and biggest deal (yet!) for My Dead Friend Zoe. We opened Round 10, and are in post-production for Fade to Black. And we’re sending out first disbursements to those who invested via Fan-First-Financing in William Shatner: You Can Call Me Bill and My Dead Friend Zoe.

Now that we’ve reached the point of providing disbursements for projects, we wanted to take a moment to talk about the differences between investing in Legion M vs. investing in individual films. We also wanted to answer some questions we’ve heard like:

  • Why are you providing returns to investors in My Dead Friend Zoe but not for investors in Legion M?

  • Which is better – investing in a movie or investing in a studio?

“Disney’s Folly”

One way to understand the difference between investing in a film and investing in a studio is to look back to the early days of Disney. 

In 1934, Walt Disney Pictures was an 11 year old animation studio that made short cartoons to run before feature films. Following the success of one of these shorts – The Three Little Pigs – Walt and his brother Roy decided to take a huge gamble by greenlighting the first ever feature-length animated movie, Snow White and the Seven Dwarves.

At the time this was a MASSIVE risk. The movie took years to make and – in an era where every frame had to be hand-drawn – was extremely expensive. Not only that, but nobody had ever made a full-length animated movie before, and many doubted audiences would want to watch. Critics thought Walt was crazy, and had taken a step too far. The movie was referred to as “Disney’s Folly” in the press. 

To finance the $1.5 million budget of the film (approx $33MM in today’s dollars), Walt and Roy mortgaged their homes and borrowed heavily from Bank of America. If the film had flopped it likely would have destroyed the studio, and potentially set back animation for decades. 

Instead, as we know, Walt and Roy proved the critics wrong. Snow White became not just the best selling movie of its time, but one of the biggest of all time (even today, when adjusted for inflation). The proceeds from the movie were used to expand Walt Disney Pictures, paving the way for a studio lot in Burbank that exists to this day.

So…which was the better investment?  

In this case, the answer seems clear. Walt and Roy financed the film with bank loans, which means all Bank of America got back was principle and interest. That’s a pretty paltry return for financing one of the largest movies of all time. That said, that’s how banks work – those loans were almost certainly collateralized such that if the movie had failed, they would have been able to get their money back by liquidating the studio’s assets.

Meanwhile, Walt, Roy, and the folks who owned the studio benefitted enormously from the success of Snow White. They may not have gotten royalty checks, but the money and prestige from the film’s success allowed Disney to expand, "levelling up” from making shorts to feature films – including a string of hits over the next 5 years with Pinocchio, Fantasia, Dumbo, and Bambi. It would be another 20 years before Walt Disney Studios had their IPO in 1957, but there’s no question that Snow White was a huge step forward in Disney’s journey to become one the most successful media companies in history.  


What does that mean for Legion M? 

While the answer for Snow White is clear, it’s only because of hindsight. There are plenty of scenarios (e.g. What if the movie had flopped? What if the studio had fallen on hard times?) where backing the bank loans would have been the better bet. And if Walt Disney had offered Fan-First-Financing for Snow White, it might be another story altogether…

The important thing to understand is that all investments are different. At Legion M you can invest in the studio, or you can invest in our films. Or neither. Or both. Either way, they are two COMPLETELY different propositions:

  • When you invest in Legion M you are buying stock in the studio. Our goal is to get big enough to IPO or have an exit that allows you to sell your stock – hopefully at a huge profit since you got in so early. The risk is that if the studio fails, your stock will likely be worthless. Either way, you have a stake in every project we do, which means a win for the studio is a win for you as one of its shareholders.

  • When you invest in a film you are buying a share of the revenue tied SOLELY by that film. If it does well you can make money. If it does poorly you can lose money. Either way, you’ve played an integral role in bringing that movie to the big screen, and get to enjoy the perks (like having your name in the credits or attending a premiere) related to your investment. Some of the “returns” on film investing are emotional rather than financial – the chance to make a mark on the world and be a part of something you are proud of.


Bottom Line 

Only you can decide “which is better” when it comes to your investments. Nobody knows how Legion M’s story will go. Investing in movies – and startups – is very risky, so you should never invest more than you can afford to lose (that goes for any movie or startup!).

But with risk comes potential for reward. We encourage you to check out the offerings and do your own research. If something feels right, give it a go. If not, that’s fine too. Either way, we’re thankful to have you as part of the Legion M community.

Onward and Upward!

Jeff, Paul, and the Legion M team

 
Jeff Annison and Paul Scanlan