Technical Analysis of the Film Sector: Polar Market Theory

If you are looking at trends in the film sector, one of the most powerful is to identify the next wave in polar markets.

What this means is that there are historical patterns in the sector, whereby certain types of films perform well against the rising tide of whatever is considered the “blockbuster” pattern of the moment.

Some examples:

In the mid 90's, the Weinstein Brothers started to have boffo success with Miramax. The typical narrative is that they were artist friendly & aligned themselves with the next generation of amazing auteurs (Tarantino, Kevin Smith, Robert Rodriguez).

The above is part of it, but misses an important point. What was actually happening in the market is that the international box office was eclipsing the domestic one for the first time — and films like JURASSIC PARK started to be the blockbuster template: SFX/VFX, spectacle, etc.

Without realizing it, the type of picture that the Weinstein Brothers made (smaller, indie films, and actually some very specific “types” within the indie universe) performed extremely well technically in the content markets against these new developments.

The next polar market occurred about ten years later & benefited LionsGate the most. With the increasing movement to bigger and bigger blockbusters, the next genre to benefit in a polar market was horror — first with “torture porn” films like SAW & then shortly thereafter with “supernatural horror” films like PARANORMAL ACTIVITY.

There are 3 things that one must do to benefit from a polar market:

  1. You must turn the content sector into a “market” — this took me many years but it involves looking at all the historical data (like Renaissance Technologies did for their hedge fund) and then literally creating a market so you can analyze technical trends.
  2. Once you have the data organized into a market, you have to understand how to “group films” — Action Thrillers, Supernatural Horror Films, Torture Porn Horror Films, R-rated comedies, Christmas themed films, etc. This is a very frustrating component of data analysis because some films overlap and you have to figure out how to configure your database to account for this.
  3. Once you have #’s 1 and 2 above, you can use game theory & a technical analysis of market trends to make “good guesses” about where the market will move next and adjust your content slate accordingly so that your slate is filled with projected release dates of the “types” of films that should perform in an upcoming market.

There are two definite trends that storytellers & studios could be capitalizing on now that they aren’t, as the thirst for this type of storytelling is obvious based on the trends & the corresponding economic benefits follow from this same logic.

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