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Movie Futures

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The movie industry came close to having their own futures contracts. It would have made it possible to speculate on the income during a movie’s first month in theatres.

The roots of this practice go back to 1996, where two traders created an online game called The Hollywood Stock Exchange, or HSX. It allowed players to trade with fictional dollars in something they called “moviestocks”. This fictional market could consistently provide useful predictions on a movies revenues, due to so many players speculating on the outcome.

The CFTC began the process to ratify these futures in 2009. In June 2010 they had given acceptance for the so called movie futures. The CFTC stated:

The contracts are intended to allow participants in the motion picture industry to manage the financial risks associated with the production and distribution of motion pictures.”

The Motion Picture Association of America — which represents the six major movie studios — ended up standing up against these contracts. They posited that these futures would open up the possibility of market manipulation, hurt ticket sales, add pressure to studios, and that this would not be used by them as a hedging mechanism. Congress ultimately gave into MPAA pressure and agreed, tacking on a ban of movie futures onto other financial legislation.

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