There is a lot of resistance in Hollywood to the futures market being finalized by Wall Street brokerage, Cantor Fitzgerald. In short, CF is seeking final approval to operate an exchange that will allow investors to place bets on the future box office performance of Hollywood films. Sounds like fun. So why is there such aggressive resistance in Hollywood?
A quick story that will illustrate my point. A few years ago, one of the big tech companies (it might have been Apple or Microsoft - I can't remember) started an office pool among its employees on which products would sell the most. Interestingly, they found that the pool was a much better predictor of success than their product development process. In other words, when a group of people are placing bets, it tends to accurately mirror the ultimate results. The larger the group of people, the more accuracy. And I suspect when they are betting serious dollars, it might sharpen the focus even more.
Hollywood, and specifically the marketing of motion pictures, is very much built on creating and controlling the perception of reality. If you have a bad movie, you still might make money if you can convince enough people to see it before the word gets out that it's not very good. In the age of instant word of mouth via social networks, it has already become difficult enough for marketers to control the message. Now Cantor Fitzgerald wants to create a financial exchange that is likely to become an accurate predictor of the truth. The truth -- often the enemy of people facing the task of selling a mediocre product.
Cantor Fitzgerald says that the film futures exchange will give the industry a legitimate way to hedge their investments -- a level of protection against a film performing badly. I think the executives would rather maintain control of their own version of reality and hope they can get enough people to the theater to lessen the losses.
Actually, I see both sides. I'd rather try to salvage success than bet on failure. On the other hand, I'm always in favor of anything that brings more light and truth to a situation. I'm betting Cantor Fitzgerald will ultimately prevail.