Predicting risk and return for a portfolio of entertainment projects

• US 20060235783A1
• Filed: 02/21/2006
• Published: 10/19/2006
• Est. Priority Date: 02/22/2005
• Status: Abandoned Application

• Current Assignee: MCJB Investments LLC
• Original Assignee: MCJB Investments LLC
• Inventors: Jung, Paul, Ferrari, Mark J., Rudd, Andrew, Cao, Adam, Balson, William E., Cohen, Mouli, Rausser, Gordon, Ryles, Scott
• Application Number:
  US11/359,636
• Publication Number:
  US 20060235783A1
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A portfolio of entertainment project such that the risk and return available to investors is attractive compared to other investments. Risk and return for a portfolio of entertainment projects is predicted based on historical performance of past “similar” projects. In one implementation, characteristics that are predictive of a project'"'"'s revenue are determined by performing a cluster analysis of historical revenues from past projects. Projects in the portfolio are classified into various segments based on these predictive characteristics. Projects are selected to contruct a portfolio. The risk and return for the portfolio is calculated according to a risk-return model that is based on historical risk and revenues for past projects in the same segment and further based on historical covariance of revenue for past projects in different segments.

Claims

1. A method for predicting the financial performance of a portfolio of film projects, the method comprising:

identifying predictive characteristics for film projects in the portfolio; and

calculating a predicted risk and a predicted revenue for the portfolio of film projects according to a risk-return model that is based on locally weighted regression of revenue as a function of the predictive characteristics using past film projects as training data.

2. The method of claim 1 wherein calculating a predicted risk and a predicted revenue for the portfolio of film projects comprises:

calculating a covariance for historical revenue for past film projects as a function of the predictive characteristics; and

calculating a predicted risk and a predicted revenue for the portfolio based in part on the calculated covariance.

3. The method of claim 1 wherein the set of predictive characteristics includes at least one predictive characteristic based on production budget.

4. The method of claim 1 wherein the set of predictive characteristics includes at least one predictive characteristic based on actors, actresses or directors.

5. The method of claim 1 wherein the set of predictive characteristics includes at least one predictive characteristic based on genre, rating or release date.

6. The method of claim 1 wherein the locally weighted regression uses a tricube kernel on a weighted Euclidean metric.

7. The method of claim 1 wherein the risk-return model is based on locally weighted regression of log(revenue) as a function of the predictive characteristics.

8. The method of claim 7 wherein the risk-return model is based on locally weighted regression of log(revenue) as a function of production budget and director.

9. The method of claim 8 wherein the risk-return model further includes a correction factor based on release date and rating.

10. The method of claim 1 wherein the risk-return model includes factors other than just locally weighted regression.

11. The method of claim 1 further comprising:

based on the predicted risk and predicted revenue for the portfolio of film projects, creating two or more securities based on revenues from the portfolio and representing different risk-return characteristics.

12. The method of claim 6 wherein at least two of the securities are collateralized by different tranches of the revenues from the film projects in the portfolio.

13. A method for assembling a portfolio of film projects, the method comprising:

defining a target return for the portfolio of film projects;

determining whether a candidate film project contributes to achieving the target return and reducing risk of the portfolio, based on a risk-return model based on locally weighted regression of past film projects; and

acquiring rights to revenues from the candidate film project if determined that the candidate film project does contribute to achieving the target return and reducing risk of the portfolio.

14. The method of claim 13 wherein:

determining whether a candidate film project contributes to achieving the target return and reducing risk of the portfolio comprises determining whether the candidate film project falls in a categorically undesirable segment; and

acquiring rights to revenues from the candidate film project comprises rejecting candidate films projects that are determined to fall in categorically undesirablethe segments.

15. The method of claim 13 wherein acquiring rights to revenues from the candidate film project comprises acquiring rights to revenues from candidate film projects from at least two different studios.

16. The method of claim 13 wherein:

determining whether a candidate film project contributes to achieving the target return and reducing risk of the portfolio comprises determining whether a candidate film project is categorically undesirable; and

acquiring rights to revenues from the candidate film project comprises rejecting candidate films projects that are determined to be categorically undesirable.

17. The method of claim 13 further comprising:

setting criteria for target film projects within a target portfolio, the target film projects selected based on a predicted risk and a predicted revenue for the target portfolio according to the risk-return model and according to the target return;

raising capital commitments based on the target portfolio;

acquiring rights to revenues from actual film projects in return for capital from the capital commitments, wherein the actual film projects meet criteria set for the target portfolio.

18. A system for for predicting the financial performance of a portfolio of film projects comprising:

means for identifying predictive characteristics for film projects in the portfolio; and

means for calculating a predicted risk and a predicted revenue for the portfolio of film projects according to a risk-return model that is based on locally weighted regression of revenue as a function of the predictive characteristics using past film projects as projects of training data.

19. A computer program product containing instructions for execution by a programmable processor to implement a method for predicting financial performance of a portfolio of film projects, the method comprising:

identifying predictive characteristics for film projects in the portfolio of film projects

according to a risk-return model that is based on locally weighted regression of revenue as a function of the predictive characteristics using past film projects as training data.