Those of you who pay attention to the site may have noticed that I’m now in charge of updating the Box Office Charts. Well, yes. Y’see it’s all part of Jimmy’s plan for global domination. First, he rises to prominence at HSBR, then he takes over the entire. but I’ve said too much. Suffice to say, you now have another source of delist estimates. What makes out Box Office Charts unique (and a big thankyou to Jimmy here) is that it is the only chart (so far as I’m aware) that gives you near real-time stock prices and ROI, checked every 15 minutes. (Not sure what ROI is? Check Tom’s explanation.)

A cursory glance at the ROIs available show that there are some bargains out there. Of course, nothing is ever certain, and delist estimates are just that. Still, if there are those of you out there who never hold released films, maybe you should consider doing so.

What immediately becomes apparent is that a lot of the limited releases look like good investments. Well, yes and no. If you’re prepared to hold them short until delist, you’ll get a decent return. What you should remember is that they are also prone to wild price swings in the short term. For bigger ports, the amount of money involved is pretty insignificant, but for smaller ports, an adverse swing of a dollar can be devastating. Of course, you can always use the swings to day trade but there doesn’t seem to be much rhyme or reason to the fluctuations. So, if you want to take the returns available on the limited releases, go ahead – I’ve shorted them myself – but when those price swings kick in, don’t say I didn’t warn you.

Any delist estimates are only as good and the method and assumptions used to produce them. And sometimes not even that good. As a consequence, I put up a little blurb, explaining some of the assumptions and discussing likely future performance. Of course, that still leaves the method, so here’s a brief description:

Where adjust estimates are provided before the official adjust figures are available, these will be based on a multiplier of the Friday number. The default multiplier is 3.1, but this may need to been marginally changed to take into account the genre of the movie. For instance, family movies tend to have a higher adjust multiplier whereas teen pics have a lower multiplier.

For wide release, delist estimates are based on the concept of “dropoff”. And, no, this has nothing to do with little friends being too tired to come out and play. Essentially, this is the concept that, week-on-week a film’s box office revenue will decrease by a fixed percentage. Obviously, this doesn’t completely mirror real life but, as a modelling assumption, it’s about as valid as the concept of the rational economic man (query: has anyone out there ever met the rational economic man? What’s he like?).

The calculation is as follows:

(W + M) +( (W + M) x D) + ((W + M) x D x D) + (W x D x D x D)

where:

W = Weekend box office
M = Monday – Thursday box office
D = 1 – Dropoff   (Dropoff is usually calculated as a percentage)

Phew! Initially, I only have the weekend estimates to go by (these are the same figures that HSX use for its adjusts). I guestimate M based on genre and season (typically 30% of W in September as against 60% of W in July). I guestimate D based on reviews, word-of-mouth, genre and season. D generally varies between 0.5 and 0.8, and is highest for December releases.

On Monday of week one, weekend actual box office figures are released. Delists are recalculated using these figures for W. On Tuesday, Monday box office figures are released. M is estimated as four times the Monday box office figures. True M can be added to the equation on Friday. Whether the Box Office Charts actually get updated this frequently really depends on whether I have the time and inclination to do. Real Life, y’know?

On Monday of week two, D can be calculated by dividing weekend two box office figures by weekend one box office figures. At this point, the equation no longer relies on any estimated figures. There may be slight amendments made to the delist figures for a variety of reasons. As the movie stock approaches delist, the delist estimates should become increasingly accurate.

Got that? Or, alternatively, you can just bet on me knowing what I’m doing and simply take my word for it. He he he.

-Huy