For decades, the major studio model dominated creative production. High capital costs, opaque distribution deals, and consolidated gatekeeping created high barriers to entry. But those barriers have collapsed, and the companies that haven't noticed are now competing with teams of five people running circles around them.
Why Small Studios Are Winning#
The cost of professional production tools has dropped by roughly 95% in the last fifteen years. What once required a $2M studio buildout can now be achieved with a laptop, a well-treated room, and a few thousand dollars in equipment. The playing field isn't level yet — but it's far flatter than it has ever been.
The independent studio isn't a scrappy underdog anymore. It's a leaner, faster, more culturally credible version of the thing it used to aspire to become.
IP Ownership Changes Everything#
The studios we back retain their IP. This single structural choice changes the entire financial profile of a creative business — transforming a services company into a compounding asset. The founders who understand this from day one build fundamentally different businesses than those who treat IP as an afterthought.
The difference in long-run outcomes is dramatic. Consider two studios with identical revenue trajectories:
- Studio A produces work-for-hire exclusively. At exit, they're valued as a services business — typically 1–2x revenue.
- Studio B retains IP on original projects. At exit, they're valued on a catalog multiple — potentially 8–15x revenue, plus upside from future licensing and adaptation rights.
The
same creative output. Radically different financial outcomes. The only variable is who owns what.
What We Look For#
Our diligence process for independent studio investments focuses on four dimensions:
- Creative track record — do they have a demonstrable aesthetic point of view that audiences respond to?
- IP strategy — is ownership clearly documented and contractually protected from day one?
- Operational discipline — can they deliver consistently on time and on budget without sacrificing quality?
- Distribution relationships — do they have credible paths to audiences, or are they dependent on a single platform or relationship?
The Cultural Credibility Advantage#
There is one advantage independent studios have over legacy players that cannot be bought: authenticity. Audiences increasingly reward work that feels like it comes from a genuine creative perspective rather than a committee. Independent studios, by their nature, tend to produce exactly that kind of work — and the audiences that find them tend to stay.
A Note on Consolidation#
We expect significant consolidation in the independent studio market over the next five years. The studios that will be acquired are the ones that have built recognizable aesthetic identities, protected their IP, and developed genuine audience relationships. The ones that won't survive are those that competed on price alone. We're only interested in backing the former.