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Movies Stock Market – A Solution To Piracy?

Recently an exchange to trade box office success of movies received approval from US market regulators according to Yahoo. Personally I believe this is an amazing idea and I had in fact pitched it as a presentation during an internship as well.

Why I think movies can be a good exchange market?

  • Solution to piracy! I think the exchange can actually help in reducing piracy by making common public a shareholder in the movie. People will be much more inclined in reporting piracy if their own financial interests are being harmed by piracy.
  • Number of participants: The success or failure of a movie is not in the hands of few people (like sports). The box office success of a movie depends on thousands of moviegoers! Although critics can enhance / dampen the success of a movie but they can’t dictate it. All exchange traded products require the presence of large number of market participants to ensure markets are not manipulated.
  • Natural Sellers: Movie producers, distributors, movie halls and investors are natural sellers on the exchange. They can hedge a part of their investment via the exchange.
  • Movie Fans, Natural Buyers: Movie fans will like to buy the movies in anticipation of movie doing well. Ofcourse a lot of people will want to buy Twilight Eclipse Opening Box Office rights and it can be actively traded.
  • Seed Money to upcoming producers: As far as I understand (and I may be wrong), new upcoming producers find it hard to raise funding and such an exchange can actually help them! The article on yahoo mentioned that big movie houses were against such  an exchange and this could actually be one reason for their disapproval.
  • Invest in a single movie, not the production house: Investors currently have no way to express a view on the success of a single movie, and have to take view on a production house and hope that all their movies turn out well. By having single movie futures we can remove this.

What are your comments? What do you think about this idea? Please do let us know…

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12 thoughts on “Movies Stock Market – A Solution To Piracy?

  1. Pingback: Tweets that mention Movies Stock Market – A Solution To Piracy? - Strat. In -- Topsy.com

  2. shantan says:

    very interesting idea. Someone should take initiative to get this started. I like the idea about trading the success of individual movies……however at the end of the day a great movie is one that has a great story.

    However, a lot of these transactions will be pre-release hype that forecasts the success or failure of a film.
    Unlike regular trading, investors cannot watch their stock go up and low based on different market conditions.
    If a movie fails, thats it. Investors cannot possibly hope for their ‘investment’ to blossom at a later date.
    It would be like…invest in a film’s success. if it succeeds, u make money. if it fails, you lose.
    Which is pretty much what producers gamble for all the time.
    So would this suffice as an exchange for producers or wannabe producers.

    So on 2nd thoughts…this might not be very lucrative for an ordinary film goer- the common man.

    However…this opens my mind to another model. ..on the lines of the Ad Exchanges in the ecommerce world – pioneered by the likes of Google ,Yahoo and their advertising channels.

    Basically we can have an exchange where directors/story tellers/producers will pool in their scripts.
    And producers/businesses/any-one-who-has-money can bid on a script/movie/story. Whoever is willing to pay more for that film, gets the production rights.
    And surely producers will look at all the strengths/weaknesses to see if that film will succeed or not.

    Exactly the way the online ad exchanges work.

    Thoughts people?

  3. Dheeraj says:

    I like the Idea of movie trading but 1 main disadvantage would be the manipulation by the sellers (Producers, directors……)

    Taker the recent releases of bollywood, not even one movie was up to the mark and all the movies were over hyped. Hnece of the hype created by the producers the trading volumes get manipulated

  4. What exactly would you be base your trading on? I mean, with no operational information, with no cost information forthcoming, trading would be extremely opaque. I would probably actively look at an idea of Movie-Based-Securities. I can either invest in the movie release, the music release, DVD release etc and do coupon based trading. That would be more lucrative.

    What do you think?

  5. Jay says:

    I think this is not going to help in curbing the piracy issues in India. We need to first understand why piracy exists and if one looks at the multiplexes and the kind of prices they charge especially on the week ends, it does puts out a section of a population that cannot probably take their family for a movie because for them it costs a bomb. (For e.g. 800 buck for a family of four for a 3 to 21/2 hr movie).

    No wonder most people find it much easier to buy pirated movies which is offered at as low as 50-100 bucks. The supply is going to exist as long as there is a demand for it. So I don’t think it will curb the piracy issue.

  6. I agree with Jay that movie watching is becoming too expensive. Thus there has to be another medium to make movie watching less expensive.

    But movie stock market can still function with proper information disclosures just like companies. Companies also have quarterly results to provide information to shareholders and public and movies will also need to follow a similar model.

  7. Deepak says:

    I also am unable to understand how the trading is going to work. What is the base/principles of one’s investment?

    If it has to be based on the profile of the production house/star-cast/synopsis, then how can a common man guess about the possible success. Unless it is also followed by a big propaganda like Avatar, or it holds a supreme star cast like Tom Cruise etc, it will be difficult to predict success.
    Does that mean, one is again investing in the production house and not in the move?

  8. Gaurav says:

    The first thing you should do when writing any article is post references in a way that they are easy to find. Without the original references and articles, all of your thoughts, analysis and insights are absolutely useless.

    The hyperlink which you have created should be in a different color otherwise one can’t locate it. You should also never post news.yahoo.com links as they are not permanent (I just got a 404 not found).

    Considering what the website says about the profile of the team of strat.in, this is a horrible article. It just seems like someone penned down a collection of random thoughts which he had just before going to bed. Just goes to show that one shouldn’t judge a book by its cover!

  9. Gaurav Choudhari says:

    Agree with gaurav above.

    I was expecting much from article after reading the title.. sorry to say but i couldnt get as much as i was expecting.

    Could you please elaborate more about the idea in detail, discuss the pros and cons, in the next series of this topic
    .
    And why to be so stingy about the size of article? 🙂 please dont make it a tweet with a little bigger size.

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