National Post Online, December 3, 2009
The Hollywood Stock Exchange is a virtual market where more than one million people buy and sell films based on how well they think a movie will perform at the box office during its opening month. The Blind Side, a Sandra Bullock tear-jerker about a homeless man who becomes an NFL star, recently sent the market through the roof.
"You could’ve bought a share for $45 and it’s now trading at $145 — that was a pleasant surprise," says Richard Jaycobs, president of the Cantor Exchange, a company that aims to one-up The Hollywood Stock Exchange: They seek to trade movie futures with actual money, starting in early 2010. "The Hollywood Exchange is a virtual market, but it’s a great indicator of the enthusiasm people have for trading box office results."
It may need a play straight out of The Blind Side to get SEC approval for its new initiative, though. After applying for a licence last November, the company has seen its application sit in limbo for more than a year.
"It gets dangerously close to essentially gambling on business, even if they make it seem soft and fuzzy because they attach it to films," says Montreal-based technology analyst Carmi Levy.
Jaycobs, however, says he isn’t concerned. "Frankly, Washington has had its hands full with a whole bunch of issues we didn’t expect since last November, but my guess is we’ll open late in the first quarter or early second quarter — in time to trade the bigger summer films."
To hear Jaycobs tell it, shares in a Hollywood blockbuster will be something, like shares in Tim Hortons, that the public will own. He envisions a future in which employees of James Cameron’s Lightstorm Entertainment get the chance to purchase a percentage of his Avatar film (which was trading at $190, recently jumped to $270 and is deemed "a buy" until it hits the $300 mark, if it does).
"People have more passionate opinions and more knowledge about movies than they do about the stocks in their portfolios," says Jaycobs, who also envisions personalities like James Cramer and Ben Stein hosting shows on CNN and CNBC warning the public about which movies to buy or sell. "Our demographic is essentially the same people you find in a lot of real money trading; probably more male than female and a combination of professional traders, movie enthusiasts and people with commercial interest in films."
Counsel has recently been hired in Canada to investigate the legality of running the Cantor Exchange on our markets. Meanwhile, The Hollywood Stock Exchange continues to grow. Sandra Bullock was actually asked to become a spokesperson for the company, but the actress is still basking in the success of The Blind Side. As one of the few actresses in Hollywood who can practically guarantee a US$20-million opening, her asking price was deemed more than the market could bear.