The MPAA Doesn't Want Anyone Shorting Movies
from the show-me-the-money dept
Last December, we noticed the revival of an interesting idea: a futures market on movies. There are actually a few companies trying to realize this concept: the Hollywood Stock Exchange (HSX), Veriana Networks’ TrendEx, and simExchange (for video games). Instead of only allowing investors to trade with fake money, HSX and Veriana are looking to let investors use real money to trade shares in the prospects of movies, and have asked the Commodities Futures Trading Commission (CFTC) to approve these exchanges for trading with actual money.
However, the MPAA isn’t too keen on the idea of having outsiders gamble on their movies. Understandably, the MPAA doesn’t want to deal with complex liability for various kinds of insider trading or “market manipulation” that might result if studios/producers/directors could profit from simply making marketing decisions. Additionally, the MPAA likely also worries that movie futures would further encourage movie piracy — given that investors who are shorting movies may have a significant financial incentive to distribute copies of movie files before a theatrical release.
These futures exchanges actually bring up several interesting questions regarding the metrics of movies — and how betting big on theatrical releases could be open to alternative marketing techniques. And if these market exchanges are allowed, will Hollywood be forced to adapt to additional business models? Could investors push studios towards taking advantage of their infinite goods or towards even more stringent copyright enforcement? These exchanges could also determine how much movie popularity can really be manipulated by investors and marketing efforts. But we may never know without real money behind movie trading. So, with this fairly important change to the movie industry at hand, the Commodity Futures Trading Commission is taking a bit longer to decide what the fate of these exchanges will be.