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When Variety wanted an expert to explain why the much-ballyhooed flick "Steve Jobs" bombed, the reporter went to an analyst at the firm Rentrak Corp. (Nasdaq: RENT).
I wasn't surprised.
Rentrak, you see, is a firm I know well.
It's also an intriguing profit opportunity.
We recommended the Portland, Ore.-based Rentrak back in June as a Big Data play with a hefty long-term upside. For investors, Big Data represents a Big Opportunity.
According to a brand-new study by 451 Research, the Big Data market is expected to double in size between now and 2019, when it will be worth $115 billion. And market researcher IDC says the Big Data market is growing at a rate that's six times faster than the general information-technology business.
To find the best profit plays, however, you have to be willing to turn over a few rocks.
That's how we found Rentrak, which is putting Big Data to a unique use...
Rentrak Corp. (Nasdaq: RENT): A Background Story
With Big Data, Hollywood consultants are trying to use social-media "buzz" - your Twitter Inc. (NYSE: TWTR) "tweets" and Facebook Inc. (Nasdaq: FB) posts - to predict whether a soon-to-debut flick will be a hit... or a bust.
As a recent MarketWatch report tells us, "for the most part, they get it right... and the studios are listening."
What Rentrak has done is create a proprietary software package known as PreAct, which uses social media to measure audience interest in a flick as much as a year before the film debuts. PreAct combines the moviemaker's box-office data with social-media analysis from two other firms, Reactor Research and Crimson Hexagon.
Paul Dergarabedian, a box-office analyst for Rentrak (and the analyst whom Variety sought out for an explanation of the "Jobs" disaster), says the Big Data software gives studios "actionable intelligence" - enabling them to shape their ad campaign in a way that either bolsters existing interest or addresses the lack of it.
"Studios can course-correct as they go along rather than brace for impact," Dergarabedian told MarketWatch. "Traditionally, marketing decisions are made in a vacuum. Now, they can actually know if those decisions are resonating with the audience."
We're talking about a legitimate - and accurate - tool.
Take "Inside Out," a Walt Disney Co. (NYSE: DIS)-Pixar Animation Studios movie that came out over the summer.
The movie was made on a $175 million budget. Ahead of the weekend debut, analysts at MKM Partners predicted opening weekend sales of $66 million.
Those analysts based their projection, in part, on the fact that Pixar films tend to average $66 million on opening weekends and $253 million during their domestic runs.
That wasn't a rosy forecast: Indeed, there was even some peripheral scuttlebutt that the movie's opening might be delayed.
But Rentrak's Dergarabedian wasn't buying. Indeed, using Big Data insights, he predicted a bigger than expected opening. He said the social-media buzz on the movie was so strong that first-weekend receipts could easily top $70 million.
In fact, Dergarabedian said that "the pre-release indicators on it have been resoundingly positive... it could end up being one of their biggest performers ever."
Talk about making a great call.
"Inside Out" actually took in $91 million during its opening weekend - crushing estimates and setting the mark as the second-best opening ever for a Pixar flick.
Having that kind of "market intelligence" is incredibly valuable for a studio.
And that's just one of the ways Rentrak's technology can put Big Data to Big Use.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.