A Startup Gives Fans The Power To Invest In Films
The entertainment startup Legion M is taking fan power to another level and giving them the opportunity to financially invest in film, TV and digital projects. The founders are based in Emeryville, and making big changes in Hollywood.
Social media has made it easier for film and TV fans to give their opinions to studios on what they like and want. One startup is taking fan power to another level and giving them the opportunity to financially invest in film, TV and digital projects. The company is called Legion M. The founders Paul Scanlan and Jeff Annison are based in Emeryville. But they’re doing things differently in Hollywood when it comes to giving projects the green light. They recently held a special screening and meetup for their documentary "Memory: The Origin of Alien."
Forty years ago, the film "Alien," re-imagined space as the eerie unknown, where no one can hear you scream if God-knows-what comes after you.
The classic sci-fi horror film made $79 million at the box office, and cost about $10 million to make. Screenwriter Dan O’Bannon went the usual route to bring his film to the silver screen—he pitched it to wealthy producers and production companies.
That was 1979. Now, you don’t have to be a millionaire to invest in a film. You can put in just a few hundred dollars.
Legion M Meetup
I’m at a taqueria in the Mission for an Alien fans meetup. People are eating burritos and licking alien-shaped icing from the top of cupcakes. Much of the crowd is over 30.
The group is celebrating a special screening of the documentary “Memory: The Origins of Alien.” It’s about the making of the first Alien movie. This isn’t just a meetup of fans. There are also investors here, like Leesha Davis.
“We’re all little nerdy in different genres,” says Leesha. But we come together for our love of movie and television, and we want to see new things and different things.
Leesha works in the entertainment business on production crews and as an extra. Legion M gave her a new role. She says, “So when Legion M came along I was like, Okay this might be my only chance to own even the smallest portion of a company that I would’ve needed to win the Lottery in order to create myself.”
Her dream came true, with only a $400 investment.
Back at the taqueria, Paul Scanlan pulls from a pile tickets. He is raffling off an Alien bobblehead. Twenty years ago he and his business partner Jeff Annison, co-founded Mobi TV, the first company to bring live video streaming to mobile devices. They’re breaking ground again, as co-founders of the startup Legion M.
“So we call Legion M the world’s first fan-owned entertainment company because we truly are, owned from day one, by fans,” says Paul.
Legion M launched in 2016. Fans invest to help fund films and projects they want to see. This is possible because of the 2012 JOBS Act, which among other things, allows startups to solicit small investments online and not rely solely on wealthy SEC accredited investors. Now, the average person can invest before a company goes public. Paul says Legion M shares are about $10 each. So far they’ve raised nearly $9 million.
“It’s kind of like Kickstarter or Indiegogo,” he explains. “But it’s next level, because you’re not just getting a coffee mug, t-shirt or bragging rights. You’re actually owning equity. Right alongside the same shares that we own.”
Their projects include big names like the late Stan Lee, Nicholas Cage, and Anne Hathaway. Legion M, along with another company, acquired distribution rights for the Alien documentary “Memory.”
Legion M’s Community
Legion M has over 20,000 investors, according to Paul. But Legion M is also a community with 100,000 members. Matthew O’Connor, the Alien cosplayer who scared me earlier, is a community member but hopes to become an investor.
“It’s worth the money because everybody is so nice and the organization is so solid,” he says under his gigantic mask. I ask him if becoming part of part of Legion M is more social reasons or business reasons.
He responds, “I would say social. The community are the people making it organized [for us] to come together to say we own this film through Legion M.”
That was part of Paul’s plan.
“We’re first and foremost a community,” says Paul. “And we believe that a community-based entertainment company has a lot of advantages.”
One of those advantages is all the fun and friendships that develop. Another is having a built-in audience that helps them pick movies to distribute, like “Memory.”
Sundance And Memory
After the meetup, I sit in a packed theater at The Roxy in San Francisco. “Memory: Origins of Alien” is an entertaining and insightful documentary that tells how the franchise was born from screenwriter Dan O’Bannon’s vision. A vision opposite of the more hopeful ideas of space exploration that audiences watched in Star Trek. I learn Alien featured commentary about gender roles in the late 1970’s, human behavior, and the monsters in our society.
The film screened at this year’s Sundance which is where Legion M also had a presence. Legion M investors voted for movies to support from home, based on film synopses and trailers. But some, like Leesha Davis, went to the festival as a movie scout, reviewing potential films for Legion M. She picked Memory.
“Yes I got to see it there and I was like this is pretty cool!,” she says. “I love being able to see the original sketches and things.”
Making Money And The Legion M Model
I get the social benefits of being part of Legion M, but what about profits?
I dial up Gene Delvecchio. He’s a 35- year-veteran of the entertainment industry and author of Creating Blockbusters. Gene teaches at the University of Southern California, Marshall School of Business. I ask him if Legion M’s community model works.
He answers, “This direct pipeline to audiences is going to be absolutely invaluable as these companies move forward into the streaming world.”
Gene says that’s because the companies want audience’s data. Which for Paul is another big advantage of the community model. Take for example Sundance. Thousands of Legion members voted for movies online and hundreds of their film scouts at the festival wrote reviews. Paul says they keep those scouting reports confidential. Not even the Legion M community sees them.
Paul tells, “During that whole process we keep the data really protected. This year we had many distributors contacting us saying, ‘What films are they interested in?’ It’s really valuable data that only Legion M has.”
Gene says that kind of data can inform studios and companies on what fans are into, what they want and how to market to them.
Still, the big buzz about Legion M is they’re shaking up the old Hollywood production model by giving fans their own seat at the investor’s table. I ask Gene if Legion M is really changing the game.
He says, “ They’re not going to have much of an impact in terms of major blockbusters because you’re looking at films that require $200 million to produce, another $150 million to market. But they are having an impact at the smaller films, the independent films.”
“Memory” received strong reviews, but didn’tmake much during its short run in the theaters. The film opened the same day it was available for video-on-demand. Gene points out that Legion M’s Nicholas Cage thriller “Mandy” had a production budget of about $6 million, and opened in limited theaters. Yes it won independent film awards, but only made about $1.4 million at the box office.
“So again,” Gene adds, “there’s tremendous opportunity in crowdfunding, in order to get money to pay for films and television shows. But in terms of the ultimate success at the box office, thus far we haven’t seen a lot of that yet”.
Paul believes in Legion M’s vision and has an audacious goal.
“If you look at our logo it’s an M with a bar over it which is Roman numeral for one million,” Paul explains. “Right now the average investor puts like $400 to $500 dollars in.”
I do the math. That’s around $400 To $500 million dollars. Plus, the promotional power of 1 million people spreading the word on social media about the projects they’re invested in.
“We’re going to be unstoppable in Hollywood,” says Paul.
Unstoppable like a terrifying beast in outer space?
The documentary “Memory: The Origins of Alien” is available on various streaming services.