At the Toronto International Film Festival last month, audiences saw "Wicked" star Cynthia Erivo return to the big screen for her newest movie, "Prima Facie."
While "Wicked" was a massive Universal undertaking, Erivo's new movie was produced in part by Camelback Productions, a smaller Hollywood venture aiming to fund independent film, according to CEO Anita Verma-Lallian.
She's one of many private investors who are betting big on Hollywood as the moviegoing landscape shifts and a handful of indie films catch fire.
"It's a different point of view to invest in these projects," Verma-Lallian said. "It's been so hard for people that are not in Hollywood to get into the industry ... We've been able to fund stories that otherwise would have had a hard time getting greenlit by the traditional studio system."
Camelback has also produced films "Doin' It" and "Runner," with stars such as Lilly Singh and Owen Wilson.
Big blockbuster films such as this year's "The Odyssey" and "The Devil Wears Prada 2" are still the domain of legacy Hollywood studios. But with the number of annual releases dwindling, and with forthcoming consolidation among major players Paramount and Warner Bros. Discovery, there's growing opportunity for smaller production companies to hit it big.
And while the business of making movies is still generally capital-intensive, recent breakouts including "Backrooms" and "Obsession" have found success on lower budgets.
To thread the needle, private capital is buying into production companies, acquiring the infrastructure and diving deeper into the financing structure of entertainment. For example, private equity firm Silver Lake backs talent agency WME, and Blackstone is behind content studio Candle Media.
According to consulting firm AlixPartners' 2026 Media and Entertainment Industry Predictions report, private equity investors in media are growing with precision, especially as studios and audience aggregators increasingly become vertically integrated.
While the cost of entry has increased, private investors are eager to own intellectual property and audiences, the report said.
"Private equity can build scaled, defensible businesses that profit regardless of which large media player owns the next blockbuster, effectively ensuring a central role in the future media value chain," the report read.
And while deep-pocketed companies such as Netflix and Amazon continue to raise the bar for content spend to make or acquire new media, traditional studios are finding new ways to keep pace.
For Verma-Lallian, investing in independent film means that she can complete movies on a much faster timeline than traditional studios can.
"A lot of times, if you go through the traditional Hollywood system, it could literally take five to 10 years from the time of inception," she said. "Whereas if you're doing it independently, we've made some movies in as quickly as a year."
This can often mean lower production costs and a quicker return on investment.
Verma-Lallian, whose background is in real estate investing, said Hollywood has proven to be a largely attractive market for herself and other nontypical private investors looking to diversify their portfolios.
She said they're also jumping on the opportunity at a time when existing financing models are weakening.
"I think the traditional sources [of financing] are starting to decline, and they're becoming a lot more risk-averse," she said. "I do also believe now with more independent films being funded and going to different pools of capital, you're able to do more."
While Verma-Lallian said she doesn't believe private capital will become the primary source of financing in Hollywood, she said the agility of investors can potentially put pressure on the incumbents.
"Hollywood is incredibly traditional, and it's very old-fashioned in the way it operates, which always I find so ironic, because ... Hollywood's so progressive, but the way that the studio systems work, it's just a very dated process from my experience," she said.
Still, studios and private investors are racing to get new storylines to the big screen. For investors, that means capitalizing on the intellectual property that hasn't already been used, according to Alex Michael, senior managing director at investment firm LionTree.
"What is clear to me is that IP has never been more valuable. It's never been harder to find," Michael said at the Financial Times' Business of Entertainment Summit last month. "But if you have great IP, you can monetize it in ways that no one could have imagined 10 years ago."
LionTree is an independent banking firm, investing in companies such as Fanatics and Fubo and advising high-profile deals such as Amazon's acquisition of MGM and the merger of CBS and Viacom. It's also investing in Paramount, pending the close of its deal with Warner Bros. Discovery.
Michael added that the entertainment industry as a whole is becoming more diversified, with retail entrants such as Gap and Mattel's Barbie, which are also helping to support the economics of the sector.
With the entry of private capital, Hollywood faces not only an economic shift but also a cultural shift in the types of movies being made.
Private investors often tell more diverse stories, take more risks and try to reach an audience that is hungry for content, said Lata Krishnan, a tech investor entering the Hollywood market.
"The big studios are often legacy organizations focused on a certain type set of films, and I think private capital has the ability now ... to invest in films that are not traditional and that give voices to stories in a different way," she told CNBC.
The result, she said, is that audiences get exposed to stories they haven't seen before.
That also means the next wave of movies must keep up with the new generation of moviegoers, who are increasingly drawn to diverse content they can relate to. Part of that shift is the rise of short-form and creator content, which can find its way onto the big screen — as in the case of YouTuber Curry Barker's "Obsession" — in a bid to draw Generation Z to the box office.
"It's my capital. I don't have to check in with anyone," Krishnan said. "So we explore a theme, a story, the actors and the production team, and we can make quick decisions."
Private investors have the flexibility and speed to jump on trends fast and fill a gap first, according to Elan Gale, a Hollywood producer and investor. He's the co-founder of QWGmire, an independent film financing company.
Gale, who has also worked on the production of shows such as "The Bachelor," said audiences are "hungry" to get back into the theater for something new and original.
"I think the primary upside for filmmakers is that private equity investors are less likely to get into the nitty-gritty of the creative process and allow some of the exploration and some of the freedom that studios maybe can't give filmmakers because they're significantly larger companies with significantly more restrictive development processes," Gale said.
"I think Hollywood is reshaping around private capital, around brands and around content creators in ways that are really meaningful," he said. "A lot of the successes that people have seen recently are a little too hard to ignore."
