UPDATE: Hollywood Stock Exchange set to launch
People in the industry like to place little wagers on the weekend boxoffice. They’re probably nothing more than five bucks, or a coffee shop lunch if “x” beats “y” this weekend. That sort of thing.
That’s about to change, though, in a major way. Soon, everyone —I mean, everyone — will be able to bet on the boxoffice, and make or lose lots of money on the outcome.
Cantor Fitzgerald’s Howard Lutnick is right now beta testing something called The Cantor Exchange. You can find it here. Lutnick already operates the Hollywood Stock Exchange, where players trade “virtual” shares of everything including stars, directors, films, etc. It’s all innocent fun.
CX, as it will be known, is a different story. Cantor is awaiting regulatory approval before it launches officially. When it does, the boxoffice could become an interesting, maybe even dangerous, game. It’s real money, and it sure looks like anyone can play, even studio execs and theater distributors.
From now until December 31, the firm has something called “It Pays to Practice,” in which they give traders fake money but convert it into small amounts of real cash winnings. (See the website for more info.)
The trading on this market will go on 24-7, meaning as a weekend progresses, a film’s values will go up and down along with investors. For a surprise hit like “The Blind Side,” this could be a bonanza.
More importantly, speculating on films’ futures will begin six months before their release dates. If CX were live now, believe me, the betting on James Cameron’s looming, maybe $500 million, gamble on “Avatar” would be the main focus of the site. And that should prove controversial, because there will inevitably be reports on what a film’s perceived business will be even as it’s being prepared and marketed.
The effect of all this could be harrowing, to say the least, especially for a studio’s finances. PR wars could become intense in a whole new way to spin advance word one way or another. Stay tuned…
January 23rd, 2010 at 12:51 am
Wonderful post and I certainly like the instructions as well.
February 17th, 2010 at 5:29 am
Interesting information. Many people aren’t aware of betting exchange, let me explain you about it in simple words. Betting exchanges are emerging as the best sportsbetting sites because they offer better odds than traditional bookmakers and you don’t see as much of your betting profit disappearing into the bookie’s pockets.
February 23rd, 2010 at 7:37 am
Great… another way people can waste their money to make a select few rich.
Are taxes bad enough?
February 23rd, 2010 at 11:44 am
Sweet
February 23rd, 2010 at 2:21 pm
What a liquidity risk nightmare from the investors prospective!
February 23rd, 2010 at 2:39 pm
Does us a favor and get rid of the malware that your site likes to distribute.
February 23rd, 2010 at 3:28 pm
This is an absolutely horrible idea. Next thing we’ll have crappy films green-lighted with big stars and find out studio heads are betting against their own films and making out like bandits in the process. Those with access to the scripts will have ‘inside information’ and make for an unfair playing field. The Film business is already one of the most corrupt, neptostic, backwards, narcissistic industries on earth. All this could possibly do is ratchet the dysfunction up even more. I can see it now. CAA makes $100,000,000 killing on spectacular failure at the box office that it set up and bet against knowing it was doomed form the start.
February 23rd, 2010 at 3:50 pm
Someone once described gambling as “a tax on the ignorant” (or the stupid depending on the commentator) and given the odds of winning any big payoff that would seem true. Those who can afford it least are often the same ones who attempt to get rich quick. The few who do can have their lives come apart, as television documentaries have shown. Not used to handling large sums of money and the gaggle of hangers-on that often go with it, the money is quickly blown through leaving lives a disaster in its wake.
February 23rd, 2010 at 4:04 pm
What the eff are you talking about Horacio?
February 23rd, 2010 at 4:04 pm
bad idea……
February 23rd, 2010 at 5:10 pm
Maybe, Rob. However, already crappy movies greenlit with big stars are the norm so, who cares.
February 23rd, 2010 at 9:13 pm
Word
February 23rd, 2010 at 9:26 pm
>>> Next thing we’ll have crappy films green-lighted with big stars and find out studio heads are betting against their own films and making out like bandits in the process. <<<
You mean like in the movie "The Producers"? LOL!
February 23rd, 2010 at 9:40 pm
Sounds alot like what the Producers tried to do from what you’re saying. I’m hopeful the creator of this idea has put alot of thought into potential problems to this, but it could be a good idea interesting at least. I wouldn’t mind making alot of money off Avatar. Heck if I had the balls to bet money I would bet for that new movie The Titans. That may be a huge hit.
February 23rd, 2010 at 9:54 pm
It wouldn’t make any sense for the studios to deliberately produce inferior films so that they could wager against their performance at the box office and make money. There’s so much more earning potential in a good film. You have to remember that movies make money (in many cases, most of what they earn) from their distribution on home video, their TV broadcasts, merchandising, etc. I don’t see this having much of an effect on the quality of films. Studios already want to make films that people want to see.
February 23rd, 2010 at 10:23 pm
Rob – you say the film business is a “corrupt, neptositic, backwards narcissistic industry” like it’s a bad thing.
February 23rd, 2010 at 11:22 pm
Riiiight, Rob. Like that’s really going to happen. Studio execs, whose entire careers are gambling on the success of their next film, which in itself is a tremendous gamble, are going to bet against it.
You’re too clever by half.
February 24th, 2010 at 12:52 am
doesn’t anyone remember the plot of gene wilder’s wonderful production of “The Producers”?
a producer oversubscribes his plays to investors by more than 100%. he then finds the crappiest scripts and actors available with the hope that the play fails.
then the producer does not need to account to his investors who’ve lost everything due to the play’s failure.
unscrupulous hollywood producers could, with the cantor plan do somewhat similarly but with a twist: hype up a potential movie as the greatest film ever; hire the biggest names (with escape clauses) and then do everything to kill or damage the production.
all that’s left to do is to buy puts (bet against the film) and then make more than they would have made, bottom-line, had the production even been a success.
what fun and, instead of being hostage to a multi-year production, these smarmy producers could be in and out within a few months ready to take on their next big thing.
soon there’ll really be no new productions as it would be much more profitable to bollix up the real ones. it’ll be the “faked” projects squeezing out the real ones. kind of like a gresham’s law on coinage (debased coins drive out the real silver and gold coins–like in america) only for films.
February 24th, 2010 at 1:19 am
Rob,
Something has to have value first before you can make money betting against it (shorting it, etc.).
It’s pretty difficult to fool traders and investors who have money on the line and the wisdom of a free market overall sorting things out.
I could see a positive effect in it giving Hollywood an incentive to make movies that are proven money-makers such as more family-oriented or G-rated films. Right now Hollywood is ideological and would actually rather lose money making a movie with left-wing dogma.
February 24th, 2010 at 2:00 am
The insiders can’t make money unless ordinary fools play the game too. Will it be regulated by the SEC?
February 24th, 2010 at 3:29 am
don’t think the money will be that good to sabo your own movie lolz
February 24th, 2010 at 4:17 am
You can bet on it!
February 24th, 2010 at 5:27 am
I guess this gives a whole new meaning to “The Producers”…
February 25th, 2010 at 9:02 am
Good point Rob, but imagine how hilarious it will be when reality immitates art, ie, “The Producers”.
February 26th, 2010 at 11:16 am
Was Enron that long ago?!
The illusion of value is laughably easy to create and the billions of dollars that inevitably flow into these sinkholes does nothing to curtail the foolish enthusiasm for risk with little real prospect of reward.
It’s so much easier and lucrative to rob people this way than with a gun in an alley.
David Says:
February 24th, 2010 at 1:19 am
Rob,
Something has to have value first before you can make money betting against it (shorting it, etc.).
March 3rd, 2010 at 10:17 am
There won’t be enough liquidity in this market for producers to bet big enough against it to offset the cost of production with little box office receipts and still make a huge profit. As long as large block trades are published where anyone can see any potential funny business going on by a large institution, then it’s fair. Let the buyer beware. Don’t like it, don’t participate. Besides, large financial institutions do that now with publicly traded companies. They can short a stock into the ground and go on CNBC spreading negative sentiment until the company blows up and Americans lose jobs over it. How is CX any worse than that?
September 1st, 2010 at 7:09 pm
Awesome post mike, it’s been a while since I’ve been on here. I see that nobody has lost their passion. Good to be back.
September 2nd, 2010 at 10:14 am
Generally I do not post on weblogs, although I’d like to express that this article actually obligated me to do so! nice post.