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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. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.