Some of the millions of dollars spent developing films thatnever go into production could be saved if a group of researchers succeed indesigning a tool that can reliably assess the value of what have previouslybeen regarded as intangible assets.
The Securities Industry Research Centre Asia-Pacific, theUniversity of New South Wales and the California Institute of Technology arenow planning the three-year research project.
The aimed-for outcome is a tool that will accurately predictwhether film and television, games and other forms of intellectual propertythat are in development, will actually be financed.
The research team will design, test, build and trial anonline prediction market over 12 to 18 months. They will use up to 50 actualfilms and games in development as securities, and involve credited producers aspromoters and traders, in other words, as stockbrokers and investors. Byincluding some well advanced projects, the trading judgements made will becalibrated against reality.
"Prediction markets, also called 'decision markets',work by trading and thus pricing contracts based on uncertain future eventssuch as presidential elections or box office performance," says long-timeAustralian industry analyst David Court. "In effect, the market serves tocapture and aggregate opinion about the future, transforming individual,anecdotal opinion into collective, numerated judgement."
"The crucial insight behind this proposal is that it isnot risk that defeats investment in new asset classes like 'content' but lackof information. Investors and investment managers find themselves with no toolswith which to assess the proposals they receive. They therefore have norational basis to proceed. For professional investors, this threshold failuresimply precludes investment."
The research will produce a proof of concept, a scorecard,that is, a performance history of the market so that the reliability of itspredictions can be specified, and a working model of the market, includingsolutions to technical design issues. The hope is that this will help build abridge from the creative industries to the capital markets.
"Hopefully producers and investors will no longer haveto ask 'how do I know if this is ever going to go beyond the concept stage''Instead they will be able to make predictions with reasonable accuracy."