Has the real options approach been applied to valuation and strategy in the film industry?
We know of at least one project underway in this area, so expect more soon on this topic. Basically films in production can be valued as option-creating investments. The application frame is similar to investments in early-stage oil exploration or early-stage pharmaceutical R&D. Firm libraries are portfolios of options, and are similar to portfolios of patents. In each case an initial investment has been made that creates an option to make follow on investments.
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