As our previous posts indicate, Paranormal Activity dominates the box office and is set to become the most profitable modern film.
That said, how can the industry value the film's "celebrity reality" associated with the creative team and their next project. Many industry players call the film a "fluke", but are concerned that copycat guerrilla filmmakers will emerge and start creating new, more effective viral campaigns for similar genres. However, the general consensus is that Paranormal Activity's success is just a "viral fluke" and will be difficult to replicate.
Alas, Oren Peli, the film's director, and his representation are dealing with the uncertain valuation associated with his film making talent in their attempt to sell his next project, a science fiction thriller called Area 51. The New York Times reported that there are no major studio bidders for the project since the risk-reward variables are too skewed from Paranormal Activity's box office performance and its inflationary pressure on the North American distribution rights.
What will happen to the actors and the other members of the creative team is yet to be seen, never mind Paranormal Activity's sequel and prequel possibilities. Professor Presti believes that the availability of investors, especially if Wall Street bonuses are distributed at projected Goldman levels, will remove the risks and stabilize future valuations related to this type of "celebrity reality."
P.S.
I Wanna Be On® is all too familiar with risky valuation methodologies. We think this scenario provides a great test to our models and their value-added strategy analysis to our students and clients. Professor Presti will be reformatting our blog posts in the next couple of days to reflect our primary variables. Check back, I Wanna Be On® will be pioneering a new blogging format as well!
