Hollywood Stock Exchange
Encyclopedia
The Hollywood Stock Exchange, or HSX, is a web-based, multiplayer game
in which players use simulated money
to buy and sell "shares" of actor
s, directors
, upcoming films, and film-related options.
The technology that drives the Hollywood Stock Exchange is the Virtual Specialist technology invented by HSX co-founders and the exchange's creators Max Keiser
and Michael Burns, who were awarded a in 1999 for the invention. Claims of this patent cover trading applications for trading virtual securities using virtual currencies over a network.
Because trading directly affects the prices of the securities — purchasing enough shares of a stock causes its price to rise, and selling causes its price to fall — and because the ultimate value of a moviestock is based on the film's box office, stock prices act as box office
predictions. For example, if a particular moviestock trades at "H$40.00", the market is predicting that the movie will gross US$40 million at the box office in the first four weekends of wide release. In 2007, players in the Hollywood Stock Exchange correctly predicted 32 of the 39 major-category Oscar
nominees and 7 out of 8 top-category winners. The Hollywood Stock Exchange is considered a good example of a prediction market
.
Previous incarnations of the game included a music
market (for purchasing musical artists), prizes for top gainers, and, briefly, a "buyout" program in which HSX would reward top players by purchasing their portfolios at a price of US$1.00 per HS1 million if the player would list the portfolio for sale on eBay
. These features have been discontinued.
The practice of selling portfolios on eBay was inaugurated by Curtis Edmonds, a former Texan lawyer who was the first to sell his HSX portfolio on eBay.
HSX attracted some private investment during the dot-com boom and ran TV ads on cable channels in an effort to attract players. After the dot-com crash, HSX was eventually acquired by units of Cantor Fitzgerald. Cantor has used HSX's moviestock prices to assist Cantor's gambling
operations in the United Kingdom, in which bettors can place bets on how much money US films will gross. HSX is headquartered in Century City, California
.
warrant of $180 million. Since Narnia could make $300 million by 2/20/06, anyone who purchased the warrant would be looking at $120 per share. On the other hand, Zathura
had a holiday warrant for $70 million. Since it closed a month after its release making less than $30 million during its run, anyone who predicted it as making more than $70 million would lose their investment. During the summer, there are similar "blockbuster warrants" that allow one to predict the final gross of a movie by Labor Day Weekend of that year.
HSX also releases various special derivatives throughout the year. During the summer of 2006, there were derivatives for the World Cup Tournament
.
Game
A game is structured playing, usually undertaken for enjoyment and sometimes used as an educational tool. Games are distinct from work, which is usually carried out for remuneration, and from art, which is more often an expression of aesthetic or ideological elements...
in which players use simulated money
Money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
to buy and sell "shares" of actor
Actor
An actor is a person who acts in a dramatic production and who works in film, television, theatre, or radio in that capacity...
s, directors
Film director
A film director is a person who directs the actors and film crew in filmmaking. They control a film's artistic and dramatic nathan roach, while guiding the technical crew and actors.-Responsibilities:...
, upcoming films, and film-related options.
The technology that drives the Hollywood Stock Exchange is the Virtual Specialist technology invented by HSX co-founders and the exchange's creators Max Keiser
Max Keiser
Timothy Maxwell "Max" Keiser is an American broadcaster, film-maker, and former equities broker. Keiser is the host of On the Edge, a program of news and analysis hosted by Iran's Press TV. He also hosts Keiser Report, a financial program broadcast on RT - formerly Russia Today...
and Michael Burns, who were awarded a in 1999 for the invention. Claims of this patent cover trading applications for trading virtual securities using virtual currencies over a network.
Because trading directly affects the prices of the securities — purchasing enough shares of a stock causes its price to rise, and selling causes its price to fall — and because the ultimate value of a moviestock is based on the film's box office, stock prices act as box office
Box office
A box office is a place where tickets are sold to the public for admission to an event. Patrons may perform the transaction at a countertop, through an unblocked hole through a wall or window, or at a wicket....
predictions. For example, if a particular moviestock trades at "H$40.00", the market is predicting that the movie will gross US$40 million at the box office in the first four weekends of wide release. In 2007, players in the Hollywood Stock Exchange correctly predicted 32 of the 39 major-category Oscar
Academy Awards
An Academy Award, also known as an Oscar, is an accolade bestowed by the American Academy of Motion Picture Arts and Sciences to recognize excellence of professionals in the film industry, including directors, actors, and writers...
nominees and 7 out of 8 top-category winners. The Hollywood Stock Exchange is considered a good example of a prediction market
Prediction market
Prediction markets are speculative markets created for the purpose of making predictions...
.
Previous incarnations of the game included a music
Music
Music is an art form whose medium is sound and silence. Its common elements are pitch , rhythm , dynamics, and the sonic qualities of timbre and texture...
market (for purchasing musical artists), prizes for top gainers, and, briefly, a "buyout" program in which HSX would reward top players by purchasing their portfolios at a price of US$1.00 per HS1 million if the player would list the portfolio for sale on eBay
EBay
eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...
. These features have been discontinued.
The practice of selling portfolios on eBay was inaugurated by Curtis Edmonds, a former Texan lawyer who was the first to sell his HSX portfolio on eBay.
HSX attracted some private investment during the dot-com boom and ran TV ads on cable channels in an effort to attract players. After the dot-com crash, HSX was eventually acquired by units of Cantor Fitzgerald. Cantor has used HSX's moviestock prices to assist Cantor's gambling
Gambling
Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods...
operations in the United Kingdom, in which bettors can place bets on how much money US films will gross. HSX is headquartered in Century City, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
.
StarBonds
StarBonds represent the "trailing average gross" of an actor or director's last five movies. As with the MovieStocks, trading directly affects the value of these bonds, until they adjust after a new release. StarBonds can be volatile, as an actor or director may star in 5 blockbuster movies, only to then star in a small independent film, causing their StarBond to fall rapidly.Options & Derivatives
A movie option may be either a "Call" or a "Put." A call is claiming that the movie will make more than a certain amount for its opening week, and a put is claiming that it will make less than that amount. For example, suppose there is a $10M call and put for the opening weekend total of a movie called Rosebud. If Rosebud makes $20 million in its opening weekend, those who called Rosebud at $10 million will receive $10 for each share of the Rosebud call that they purchased, and those with a put would lose the money they invested. If it made $5 million, those with the Put would receive $5 a share and those with a call would earn nothing. As of June 2006, Options have been renamed as Derivatives.Funds
Some veteran HSX players run special securities called funds. A fund is similar to a personal portfolio; however, all the holdings of this particular fund are visible to the public. Funds also have themes, so instead of being able to invest in any security, the fund manager may only be able to invest in horror movies, or sequels, or movies based on video games, for example. The price of a fund is only influenced by the stocks held by that fund, not by players who buy or sell the fund. Most funds cash out once they reach H$100 per share, or the equivalent of H$100 million for a personal portfolio. This type of security can help to educate newer players about how to effectively manage a portfolio, and is also an opportunity for slow and steady growth.Special warrants
During the holidays, there are "holiday warrants" that allow one to predict the final gross of a movie by President's Day Weekend of the following year. For example, there was a NarniaThe Chronicles of Narnia: The Lion, the Witch and the Wardrobe
The Chronicles of Narnia: The Lion, the Witch and the Wardrobe is a 2005 epic fantasy adventure film directed by Andrew Adamson and based on The Lion, the Witch and the Wardrobe, the first published and second chronological novel in C. S. Lewis's children's epic fantasy series, The Chronicles of...
warrant of $180 million. Since Narnia could make $300 million by 2/20/06, anyone who purchased the warrant would be looking at $120 per share. On the other hand, Zathura
Zathura (film)
Zathura: A Space Adventure is a 2005 fantasy science fiction film directed by Jon Favreau, and is loosely based on the illustrated book Zathura by Chris Van Allsburg, author of Jumanji. It stars Jonah Bobo as Danny and Josh Hutcherson as Walter. Tim Robbins also had a small role as the boys'...
had a holiday warrant for $70 million. Since it closed a month after its release making less than $30 million during its run, anyone who predicted it as making more than $70 million would lose their investment. During the summer, there are similar "blockbuster warrants" that allow one to predict the final gross of a movie by Labor Day Weekend of that year.
HSX also releases various special derivatives throughout the year. During the summer of 2006, there were derivatives for the World Cup Tournament
FIFA World Cup
The FIFA World Cup, often simply the World Cup, is an international association football competition contested by the senior men's national teams of the members of Fédération Internationale de Football Association , the sport's global governing body...
.