In most markets, a 90% failure rate would force a rethink of how capital gets allocated.
In content, it is still too often treated as normal.
That is the real investment problem in film and TV. Most projects fail to generate acceptable returns, yet many investment decisions are still made with fragmented evidence, inconsistent evaluation criteria, and limited visibility into likely commercial outcomes. For content investors, the issue is not simply creative uncertainty. It is that too much capital is still being committed before the economics of a project are rigorously tested.
This is where a better underwriting model matters.
Content investing will never be risk-free. But it can be made materially more disciplined. The biggest opportunity is not finding more submissions. It is improving how projects are screened, structured, and advanced before capital is deployed.
The problem is not deal flow. It is capital efficiency.
Most content investors are not short on opportunities. They are short on dependable ways to identify which opportunities are genuinely worth backing.
Projects often enter the pipeline with strong scripts, attached talent, known IP, or persuasive packaging. But that is not the same as investment-grade conviction. The more important questions sit beneath the pitch:
Is there real, measurable audience demand for this concept?
Is that demand durable or short-lived?
Does the project travel across markets?
Does the packaging improve economics or simply raise cost?
Is the likely route to market aligned with where the value actually sits?
Without strong answers to those questions, capital allocation becomes reactive. And when that happens at scale, weak returns stop looking like isolated misses and start looking like a system problem.
The back-tested evidence shows the industry can do better
The case for better underwriting is not theoretical. Parrot Analytics has back-tested its pre-release concept testing methodology against large-scale real-world outcomes — and the results show that stronger pre-investment evaluation can materially outperform industry norms.
For television, Parrot Analytics examined more than 100,000 series released over the previous six years, excluding single-season miniseries. Comparing actual renewal outcomes and titles that reached an “outstanding” threshold of 8x demand, the company found that its pre-release Concept Testing system was 4x more effective in predicting renewals, 7x more effective at identifying standout shows, and 80% accurate in predicting whether a show would be cancelled.
For movies, Parrot Analytics applied a similar framework across more than 45,000 movies, defining success as breaking even at the global box office relative to production budget. The results showed profitable titles were identified 400–700% more effectively than the industry average, while likely unprofitable releases were correctly flagged 70–80% of the time. The same back-testing showed 70–90% accuracy in predicting whether a wide theatrical release would break even, and 80% accuracy in identifying titles unlikely to do so.
That matters because it reframes the problem.
If the industry’s baseline hit rate is weak, and if better pre-release evaluation can improve title selection this materially, then content’s poor capital efficiency is not just the nature of the business. It is also a solvable underwriting problem.
Packaging decisions are investment decisions
Better underwriting does not stop at concept selection. One of the most common reasons projects underperform is that packaging decisions are treated as creative or commercial choices rather than capital allocation choices.
But a project’s return profile is shaped by variables such as:
cast mix
budget range
release model
platform fit
territorial strategy
licensing structure
Each of these can change the economics of the same underlying asset.
Parrot Analytics has shown how scenario-based analysis can improve decisions at this stage. In one example, an independent production company used Parrot’s data to evaluate how different casting options, budget levels, and distribution pathways would affect ROI while packaging a film for a streaming pitch. By quantifying those scenarios across streaming platforms and modeling long-term revenue potential, the company identified the strongest commercial configuration and sold the project at a premium significantly above its production budget.
The point is not simply that data can support packaging. It is that packaging itself should be underwritten. Investors should know which version of a project creates the best risk-adjusted return before the deal is locked.
Distribution should be built into the investment case
The same principle applies to release strategy.
A content asset does not have one fixed value. Its economics change depending on where and how it is distributed. Theatrical, streaming, hybrid, and multi-window models can all produce different outcomes. A title that is only moderately attractive in one channel may become much more compelling in another once acquisition, retention, or long-tail revenue contribution is properly modeled.
That is why distribution can no longer be treated as a downstream operational detail. It needs to be part of the investment case from the start.
Parrot Analytics’ approach models factors such as box office potential, subscriber impact, revenue contribution, and platform fit before production is greenlit, helping investors compare potential routes to market with more precision.
That makes underwriting sharper. It also improves negotiations, because the seller is no longer relying on generic optimism. They can defend value using modeled commercial outcomes.
The opportunity is bigger than better forecasting
The real opportunity is better investment performance.
If most content still fails to generate acceptable returns, then the market is telling investors something important: the traditional way of evaluating projects leaves too much value on the table and lets too much weak capital deployment through.
Back-tested results show that stronger pre-release evaluation can materially outperform industry-average selection outcomes in both television and film. That means better underwriting is not just a process improvement. It is one of the clearest capital efficiency opportunities in entertainment today.
The firms that outperform in content investing will not simply be the ones with access to more projects. They will be the ones that can identify stronger projects earlier, structure them more intelligently, and bring real evidence into every high-stakes decision before capital is committed.
That is how content starts to look less like a collection of speculative bets — and more like an investable asset class.
To see how data can unlock the true value of any title or library, explore our solutions for Content Investment Funds, and our Concept Testing product.
Ready to make your next move? Reach out to our team for a consultation.
