Monday, June 28, 2010

Movie Futures Market Approved, But It's An Empty Victory

The CFTC has approved Cantor Exchange to trade futures based on film box office performance.  Earlier in the month, the CFTC had approved a similar program to be operated by Media Derivatives.  All of this would appear to be a big "green light" for the trading of film futures. But...

Unfortunately for Cantor and MD, the House of Representatives included a ban on these trades as a part of the economic bill passed last Friday.  This ban is likely to remain a part of that law when it comes out of Congress, and the President has indicated he will sign it.  So, this is a hollow and temporary victory for Cantor and MD.

It may very well be that Wayne Friedman of MediaPost is right when he says it's about access to information. (I made a similar point in a post back in April.) The culture of Hollywood is all about spin, and that means tight controls on what information leaks into the public.  The culture of securities is supposed to be about access to information.  Investors are supposed to have as much information as insiders in order to make their trading decisions.

There's a big cultural clash between those two positions -- control vs. access.  It is actually a common theme in the media and entertainment business. (And technology too -- look how crazy Apple went when the iPhone 4 leaked.)  Hollywood seems to have won this round.  Congress trumps the CFTC, so there is unlikely to be any trading based on box office numbers.  Too bad.  I still think it would have been fun.

Cantor says that it is still committed to providing tools for the entertainment business to use in connection with financial transactions.  I will be interested to see what they come up with next (and what the studios do in response).

Thursday, June 17, 2010

3D Glasses - An Emerging Business Opportunity

There is an opportunity quickly emerging for consumer electronics companies.  Most of the new 3D televisions  (other than the Vizio TV that was just announced) use glasses with active electronics.  The television manufacturers are supplying one or two pairs of these glasses with each TV, and then selling extra pairs for about $200 each.

In reality, these glasses can probably be sold for under $100 a pair and still yield a healthy profit.  I guarantee that there will be several companies offering a full line of active-electronics 3D glasses at discount prices by next year's CES.  This is a product category that currently doesn't even exist and it will become significant within a year or less.

Things are moving fast, and that means new opportunities for entrepreneurs to make money. If you want to get rich, watch new developments and figure out what new products and services will become useful as a result.

Saturday, June 12, 2010

Anticipating Change - Another Lesson...This Time From Twitter

Today I was reading a very good article on which addresses investment in startup businesses  built around Twitter.  The thrust of the article is that Twitter's acquisition of Tweetie, and its limitations on building ad-based businesses around the Twitter platform, is making it very hard for Twitter-based startups to attract investors.

Ok, I don't want to sound too sarcastic here, but....duh!  That's not a comment on the journalism in the article, but on the apparent surprise being experienced by these would-be entrepreneurs.  As we are seeing more and more, especially in the areas of media and technology, you can't build a business model that depends on someone else to keep doing what they are doing.  

Companies change; people change; the business environment changes -- this is happening every day.  Don't plan  your business expecting that anything will be the same by the time you implement the plan.  You need dynamic plans that can change faster than the surrounding circumstances.  You need plans that thrive in an unstable environment.  You need to be moving your cheese so fast that everyone is trying to keep up with you -- not the other way around.

Honestly, if you come up with a great way to make money from Twitter's platform, why would you expect that Twitter wouldn't do it themselves?  Why would they let you make money that they could be making?  They will only support your success if it ultimately brings them more success. It's a basic tenet of business.

Here's the lesson -- don't chase Twitter or Google or Relativity or Summit or anyone else.  Instead, be the next big thing.  If you don't have a truly innovative idea that doesn't depend on anyone else, then don't launch your company until you come up with one.

(As an aside, the author of the article, Om Malik of GigaOM  (@gigaom)- a super bright guy - definitely understands all of this.  But he also seems to reach the conclusion that it is in Twitter's self-interest to act more predictably.  I'm not sure if I agree, although it's a great issue to ponder.  Om implies that successful platforms have usually grown by supporting their developer base, and goes on to point out that the platform owners almost always reap the bulk of the benefits from those relationships. He draws  parallels between Twitter and Google, Intel, Apple, Microsoft, Sony and Facebook. All of this is what makes the article so good.  I recommend you spend five minutes and give it a read.)