And...action! How to win Hollywood futures trading
byMar 15th 2010 3:30PM
As the film world convenes this week at the ShoWest convention in Las Vegas, one of the hot topics is sure to be the box-office futures market. Come April, after expected approval by the U.S. Commodity Futures Trading Commission, industry and regular folks will be able to purchase futures derivatives from Cantor Fitzgerald that basically bet on or against the success of studio movies six months before they open.
The tally covers the first four weeks of domestic release. Shares will be worth a millionth of the film's expected total, so a predicted $100 million movie would offer $100 contracts. The minimum contract will be $50.
WalletPop wants kibitzers who fancy themselves Hollywood players to get a head-start, so we've enlisted an expert for tips on how to spot potential winners.
"It's a chance to make a little nest egg," Jeff Bock, a box-office analyst for Exhibitor Relations, the firm that does the actual counting of the ticket grosses, told WalletPop.
Bock, who confessed he might dabble if it's not considered insider trading, recommends the following:
Stay away from the big sequels.
The expected-revenue ceiling might be too high, and so many will be betting on the film that it will be hard to make money.
Look for the underdogs.
Your best chance of generating a solid profit with a positive wager is the sleeper film. "You'll have to find movies that everybody's overlooked, and that's hard to do," Bock said. If you have access to early test-audience or critical screenings, and you see an unpublicized movie that blows you away, by all means make a bet.
The industry trade paper Variety and blogs such as Nikki Finke's deadline.com and JoBlo provide nugggets. "There's a smorgasbord of insider information," Bock said. "There's so many reports on early footage. Search for the most accurate."
Track the arc of up-and-coming actors and directors.
Those whom you think are going to hit a peak in six months can elevate the receipts of their films -- perhaps in a way that others will not anticipate. For example: "Twilight" star Robert Pattinson seems to have experienced his first celebrity cycle (and his first bomb, "Remember Me"). But the visibility of "Twilight" costar Taylor Lautner seems to be climbing, Bock explained. Look at what Lautner will be appearing in six months or so from late April.
Keep a lookout for release dates.
A studio that schedules a relatively unknown film on the Fourth of July or some other peak time obviously has faith in it to compete during the blockbuster high season. See what kind of price it's getting.
Even if a film isn't "tracking well," showbiz lingo for consumer awareness, don't write it off if its studio has a consistent record of producing hits. Remember, the release is still six months or more away. Bock pointed to Disney's "Sorcerer's Apprentice." "No buzz" he said, adding: "That's a film that I would take a chance on. A film with the Disney brand usually pays off."
Note that a smaller firm, Veriana Networks, also plans to enter the movie derivatives game, but it reportedly will be open to only Wall Street types and "qualified" investors. The rest of us will have to make our fortunes elsewhere.
For a more thorough explanation of how the futures trading will work, click here.
Remember WalletPop on your way up.