I barely know where to start with the absurdity of the Canter Exchange’s notion of trying to commoditized Domestic Box Office Futures. Every time I see or read something new, it gets worse.
Let me start with this… these guys are liars.
Their big spin is that this whole effort is about creating new ways for the film industry, large and small, to hedge funding. But the lie? Even on the Canter site, the issue of funding is based on the eventual maturity of their real business…. getting small fish suckers to gamble on domestic box office.
Seriously… DOMESTIC box office only… which at most represents 30% of revenues.
Moreover, Canter is essentially piggybacking on the studios’ big investments while providing absolutely no benefit to the studios That’s why MPAA opposes this so definitively. There is a lot of talk about how this system would allow studios and funders to hedge their investments. But there is no system to achieve that currently being offered.
Worse, even in the fantasy worlds set up by Canter’s cabal of uninsightful academics who are the ones claiming this is legit, the public is the victim of any future hedging. One fool offers that it will benefit studios to hedge by using the funds from the DBOF investors instead of taking on partners who take, for instance, foreign theatrical as compensation for the investment. Lucky Joe Six Pack!!!!
And what would this fantasy return on the hedging dollars be… since it’s not any form of non-domestic theatrical revenue? Let’s chew on the notion that this exchange would cover half the budget of a $100m movie. $50 million. At 100% return to the exchange, the movie would have to gross about $93m domestic to return the $50m.
But what about marketing? If the studio is paying it themselves, the benefit of not selling off foreign is gone. In fact, the studio is now in for, say, $150m to the exchange’s $50m and has, essentially, given up the domestic theatrical market.
Of course, this won’t happen. Studios would pass the costs on to the exchange investors. So at 100% return minus p&a, break-even for the exchange is about $190 million at the box office.
Of course, this won’t happen either. Even if studios give the exchange 75% of domestic rentals minus p&a for the $50 million, their break-even is about $232 million.
THAT is why investment runs dry. This is not a good business in which to invest, unless you get lucky or you get tax benefits.
Want to claim this is good for lower budget films? Great. Everything except marketing reduces to scale. Marketing costs become a higher percentage of the spend.
But again…. This investment/hedging nonsense is a smoke screen. The business for Canter is to charge a few percent every time a sucker/investor buys shares.
They will sell “the glamor of the movie business” as a way to play the lottery while you get to say you funded Avatar, meanwhile forgetting to mention that their ultimate best case scenario is you doubling your money, not multiplying it by ten. That would truly by a one in a million event.
And again, the thing that most separates movies from corn is that revenues do not stem from the existence of the commodity, but by many other variables that aren’t encountered until late In the existence of the commodity. Yes, a trucking strike could affect the delivery of the corn. But even that is relatively easy to anticipate compared to the vagaries of the film business.
The whole thing is currently based specifically on domestic box office returns from wide release films. So to begin with, that market is dominated by majors and is likely to become more their domain, not less. Second, this takes distribution choices out of the hands of professionals and requires wide releases to make contractual marks… even if it is a losing idea… and even though there seems to be no consideration of the costs of maintaining a failing release.
I feel like Alice, as every way I turn, another bizarre reflection if this crazy idea turns up. It feels like an analysis that never ends because there are so many flaws built into the idea itself.
One last thing… if it’s just screwing over people dumb enough to buy into this and there may be a profitable angle (like shorting domestic theatrical and pushing to other kinds of domestic delivery), why should MPAA balk. It’s not because they fear The Future. Bob Pisano was dumped by SAG, in part, because he sold the union out to Netflix and their future. It’s because they will be the first ones sued… over and over again. When people lose their money, yeah, they will sue Canter. But you can be sure that the studios will be named and pursued… even if they disassociate themselves from this gambling venture 100%. And again, this is with no upside for the studios.
There is a lot of money in legal con artistry. Canter will keep fighting. And I will – sigh – keep researching. I wish this was my last word on this. But the threat is real. And this is an uniquely destructive possibility.

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