I've yet to encounter another art industry simulator as fun and informative as the Hollywood Stock Exchange (HSX). First launched in 1996, HSX is a free web-based multiplayer gaming simulator of American film industry. The rules are simple: players use virtual currency to buy, sell, short and cover “shares” of films, directors, actors and other related virtual securities. Although the exchange is entirely fictional, it reacts to actual industry-related news, making itself a community and information hub for both professionals and enthusiasts in the film industry.
Users need to have sufficient knowledge in financial instruments and the for profit film industry to navigate the exchange. Take “film stocks” for example. An IPO (Initial Public Offering) and a security symbol are created when a project is under development. Its listed price fluctuates based on predictions of its potential real-world earnings. When the film premiers, its stock price will be adjusted following the formula (2.7 * Opening Weekend Box Office), and it will eventually be delisted from the exchange four weeks after its premier.
For example, Godzilla 2 (2018) is to be made as IPO this weekend at a price of HSX $115, which indicates the exchange has predicted the film will generate $115,000,000 in box office revenue four weeks after it premiers in 2018. After this weekend, any news in regard of this project will be posted in the HSX forums with a tag of its security symbol GODZ2.
Players who post the news must provide links to a credible source, and a false tip may land the player’s account in lock up mode. The exchange users can then buy, sell, short and cover this stock based on its related news causing prices to fluctuate accordingly. If, for example, the film gets Steven Spielberg as a director its price will increase to $150 or higher. If the film loses its starring actor because of a contract dispute, the film’s listed price will drop sharply.
Directors and actors have their own securities as well. After a film is delisted, stock price of each star participating in the project will be adjusted based on the average of their last five projects. The exchange finds this way most effective in presenting the individual’s current financial earning abilities.
For example, Peter Jackson has a listed price of HSX $199, which means he made around $200,000,000 in four weeks for his last five projects (Three Hobbits movies, The Lovely Bones and King Kong). Woody Allen, a better director with a more acclaimed career is only listed at HSX $24.25. Although Mr. Allen is a great artist, his current earning ability is significantly lower than Mr. Jackson’s and the market has priced him accordingly.
The exchange also offers other securities predicting different aspects of the industry. AwardOptions allow users to trade Oscar nominated movies and to predict the winner of each category. Blockbuster Warrants allow users to predict how much revenue a blockbuster can reach 12 weeks after its premier. TVStocks predicts the number of episodes a newly aired series can stay on air. The exchange covers and predicts almost every aspect of the entertainment industry. Most predictions generated in the exchange are within a 10% margin of error (Hugh Jackman’s latest sci-fi film Chappie was predicted to have an opening week box office of $14 million on HSX, it received $13.5 million in box office in real life). [SU1] In addition, users of HSX correctly predicted eight winners out of nine major categories for the 2015 Oscars.
HSX has more than 800,000 registered users, and each user can always find credible industry related news a few hours before major news channels’ publications. The exchange may seem complex to outsiders, but is a great way for young professionals who are considering a career in the entertainment business to learn the trade or just get informed about the industry.
As the for-profit theater industry continues to grow, it would be refreshing to see a theater version of HSX where theater lovers can trade their favorite shows, actors and directors using virtual currency. Using the current exchange as a model, a new version could function as a community of theater lovers, a professional revenue tracking and predicting tool, an industry news hub, and a historical data center. What harm can it do for the theater industry and perhaps even the larger nonprofit arts world to copy some of HSX’s structures and overall operating methods? Personally, I think it would be very interesting to see the nonprofit arts industry’s reactions to an online platform which treats everything and everyone as tradable securities .
CNN Interview with HSX co-founder Max Keiser