Goodbye Hollywood

Well is looks like Hollywood futures will not be premiering anytime soon. The House of Representatives and Senate banned movie box office trading. Clearly, Congress and Hollywood don’t really like the futures/prediction markets. These markets usually try to accurately predict the future based on how people are betting.We already have this with Intrade which predicts the winners for American Idol and political candidates. Basically, the way this market would work is that people could bet on whether or not a movie would make a certain amount of money. Despite what Congress and Hollywood it would be good to allow people to put their money where their mouth is and bet on their convictions. For instance, people who don’t know anything about horseracing stay away from the track. The same thing would happen with the Hollywood futures market. People who only knew the most would bet and others would stay away. We already a predictions market for political candidates, the stock market, and the price of commodities why not extend this to Hollywood. However, what if we were already able to predict the winners and losers of the box-office?

Researchers at the Hewlett-Packard's Social Computing Lab published a paper that Twitters in essence can predict box office returns. Based on 3 million “tweets” researchers were able to figure out whether people liked or didn’t like a movie based on what people tweeted. In fact, the tweets were able to perform better than the Hollywood Stock Exchange (HSX). If we had enough “tweets” we could predict many more things. For instance, couldn’t we predict where people would be likely to go, what their eating, and how they like to spend their time? This looks like a marketing goldmine to me. Although, I think it would be hard if not impossible for the House of Representatives or The Senate to ban Twitter.

Link to paper: http://www.hpl.hp.com/research/scl/papers/socialmedia/socialmedia.pdf