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Wednesday, August 09, 2006

The Oracle Of Hollywood

My dad just tipped me off about this piece from Monday's BusinessWeek:

"Hollywood film studios increasingly use an online 'prediction market' to help with decisions regarding advertising and promotions. According to BusinessWeek, studio executives monitor one such market - in the form of an online game called the Hollywood Stock Exchange - to glean clues as to the potential box-office appeal of new films and movie stars. In the game, players use $2 million in pretend money to place bets on box-office success. The game predicted that the latest 'Pirates of the Caribbean' sequel would bring in $110.7 million to $138.6 million on opening weekend. The film brought in $135.6 million. BusinessWeek notes that other industries are starting to turn to similar online prediction markets for help with business decisions. (RKS)"

Smart model, seeing as the studios are paying these guys for audience demo information and other more specific research. If, as the article says, "pharmaceutical and technology storage businesses are currently using the service" (um, exactly how?), then which industry will be next?


martin said...

This thinking has been picked up elsewhere - I think The Economist mentioned it and Russell Davies posted about something similar. The underlying theory is that an aggregated group of experts will generally reach the right conclusion when given motivation to give their opinion.

There was a lot of noise around spreadbetting and betfair in the last general election, as the spreads and exchanges generally predicted the result more accurately than polls.

The interesting application is in futurology and innovation. If you had an exchange similar to hollywood stock exchange for new technology, you'd have a lot of interesting data. What would PlayStation3 be trading at vs. the XBox at the moment? What price picture messaging?

Mark said...

The game has been going since '98 but it took a few years before the studios started buying the data. The thing I love about it is that it taps into the "wisdom of crowds research) and is the most natural research environment you could imagine. Maybe we can build a "sims" game to help us get rid of focus groups!