As ZTO and bluesnowmonkey pointed out, if the wristbands became individually addressable, you could determine their locations in the crowd using an overhead cam

As ZTO and bluesnowmonkey pointed out, if the wristbands became individually addressable, you could determine their locations in the crowd using an overhead camera and a quick calibration routine (which the audience would just think was part of the intended effect; It would just look like more random flashing).