Warning! Game Market:Hedge Betting (Serious stuff/Srsly)
polycounter lvl 18
I know e3 is this week and everyone is excited. However, this also might make a good opportunity to discuss such since these events get so much of the industry together.
Speculators betting on movie success
http://news.bbc.co.uk/2/hi/business/10317873.stm
Now I can't help given our global income exceeding the movie industry. That these same speculators will be pushing to basically bet on future game releases.
If those didn't realize, remember the oil prices sky rocketing because of the speculators? Understand this is not only betting for the success of something, its betting against the success of something. With the amount of money going into these sometimes. I can see "naughtiness" potentially.
In short order, its legalized betting. Which I'm not saying is right nor wrong. I am saying its going to open a can of worms and will lead to discredible people/organizations trying to sway the success or failure of a project for their own benefit(beyond some of the publishers CEO).
Oh yes, and WOLF! WOLF!. I know many will try to disregard thinking Im being negative ned. Or simply not care. Well, you might stop to think why you should care. Enough to write your congress person to at least state why they should not allow hedge betting to expand into the corporate creative industries.
Speculators betting on movie success
Market traders who usually speculate on the price of oil or the value of the pound have found something new to bet on - movie releases.
Following US regulatory approval, a new exchange is to begin offering traders the chance to bet on the success of the latest cinematic productions.
http://news.bbc.co.uk/2/hi/business/10317873.stm
Now I can't help given our global income exceeding the movie industry. That these same speculators will be pushing to basically bet on future game releases.
If those didn't realize, remember the oil prices sky rocketing because of the speculators? Understand this is not only betting for the success of something, its betting against the success of something. With the amount of money going into these sometimes. I can see "naughtiness" potentially.
In short order, its legalized betting. Which I'm not saying is right nor wrong. I am saying its going to open a can of worms and will lead to discredible people/organizations trying to sway the success or failure of a project for their own benefit(beyond some of the publishers CEO).
Oh yes, and WOLF! WOLF!. I know many will try to disregard thinking Im being negative ned. Or simply not care. Well, you might stop to think why you should care. Enough to write your congress person to at least state why they should not allow hedge betting to expand into the corporate creative industries.
Replies
This means less original games, more games about whats popular/cool/trendy right now. And games would have to produce even more hype.
The place to make money on a market like this will be by picking out sleeper hits. Some unknown developer has some wierd new game mechanic or story hook that nobody has ever heard of? Its a risk, but if you pick the next Tetris, Doom, or Farmville and youll make a killing for your investment.
Edit: Another thing, this might actually reduce some of the hype that goes into marketing games. If your next "sure thing sequel" is going to suck, why hype it and damage the property? Just let the speculators take a bath and start working on a new version.
I think though your not addressing one point. They can bet against the success of a property as well. I admit being ignorant of the specific rules of whom can bid or what a developer can tell a speculator. But whats to stop a developer from hedging its own product? Saying its so good, realizing it will probably flop and betting against the property from making any money. Or worse, specifically trying to warp the development process so it does end up a flop. A Big Rigs if you will.
The same thing that stops them from doing that with their stock prices. SEC investigations, lawyers, fines, and possible jail time. Thats not to say that all sorts of fraudulent crap wont happen tho, especially in the first few years.
That didn't stop hedge betting on bad mortgage assets that helped cause the crisis we are in now. In short it wasn't regulated well. I guess before we call this good or bad in either direction. What kind of regulation oversight will be involved? Know any CFO's that know this stuff?
Yes but at this point the only thing at stake in a market crash would be speculator money. Even then, only if they planned to flip their shares and not ride out the returns themselves. If this really took off and someday the entire industry was built around financing through a futures market...then a potential market crash would be a real problem. A scenario like that is probably many years in the future and things will have had some time to mature between now and then.
The biggest short term negative I see is that a lot of employees will probably be forced to take futures options in lue of actual cash money. The whole "work for me and maybe Ill pay you when the game is a huge hit" thing is already bad enough without extending it beyond the vaporware market
It's all too easy to manipulate the market, even with the amount of red tape introduced over the last few years. The SarbanesOxley act for example made more paperwork for everyone, but overall did nothing to prevent the crash only a few years after its implementation.
Dunno, people are still short selling, mortgage backed bonds are still being traded, the futures markets are still alive and well and the banks are still taking massive risky bets with taxpayers money.
Blah...
*whistles while darting eyes around.*