Movie Box Office: Real betting is on the way
It seems like the last thing needed is to complicate things by adding another layer of financial sector involvement, especially in futures trading that (if I read correctly) won't be able to directly finance anything (other than the CEOs pockets in the form of fees). Its a derivative, so the swap has no basis in equity or actual value of the film itself. Its conjured up from thin air for people to wager on.
Its seeing stuff like this that makes me wonder, why, oh why will I be arrested if I host an underground poker tourney, and be charged with illegal gambling; but if it is labeled a "credit default swap", "future", "derivative" / any other wacky scheme traders come up with, its call capitalism? (not anti-capitalist, I do understand the inherent value of some futures trading, but really? Box Office futures? Seems a bit beyond the pale)
My fear in this (my specific fear, other than it seems to further the trend toward casino wall street culture) is that the marketing of a film now falls under SEC control, even if its not publicly funded. If a director shows a rough cut of a film to a friend and its amazing, beyond expectations, and he buys futures on it, would that be considered inside trading? It would seem that this 3d party entity (which a film maker could not opt out of being traded, I assume) would open the door to all kinds of liabilities and what not, even though the film makers itself did nothing to seek that kind of exposure. And what is the solution should it start causing problems? Box Office Flop Swaps?
and one last thing, every movie, no mater how grand and moving, has a shelf life. At some point its value drops to 0, or at least begins a steady decrease in value until it nears 0. Films do not grow in income/time once the decline starts. Avatar will never make more money this weekend than it did two months ago. It might see a boost when it hits DVD/BD and then start the trend downward again.
It may take longer for some films than others, but when you buy futures of lumber, coffee, oil etc you know it will be worth SOMETHING, and likely will trend upwards over time. In film its not a question of if but when the commodity is worthless (or at least the futures of that commodity becomes unsellable). That means every film that is traded on will leave someone holding the bag (the ones who thought weekend 3 would be just as great as WE2, but in reality it tanks and never recovers on the 3d week)
yeah after typing that out, I am no longer undecided in my opinion.
Edited by Michael Collier, 23 February 2010 - 03:46 PM.