The encyclopedia · R&D & Science · Product decision · 1996–2011
Hollywood Stock Exchange let fans trade fake shares into real box-office forecasts
A game of fake movie stocks turned 200,000 traders into a forecasting market academics found predicts box office.
Hollywood Stock Exchange · Cantor Fitzgerald
the move
The Hollywood Stock Exchange was started in 1996 by Max Keiser and Michael Burns with $500,000. Players received virtual Hollywood dollars to buy and sell MovieStocks and StarBonds, trading films and actors like securities on a Nasdaq-style exchange.
By March 1999 the site had nearly 200,000 registered traders and traded about 300 million shares a day, roughly a third of the NYSE's daily volume; opening-weekend box-office results and news from movie sets moved the prices. HSX monetized through advertising and by selling subscriber data to studios.
Academics took the game seriously as a forecasting tool. A 2011 study in the Journal of Product Innovation Management examined HSX and found virtual stock markets produce reliable new-product sales estimates, while identifying a bias: low-expectation products get overestimated, partly because players gamble in the absence of real money.
why it works
- Trading forces the crowd to commit to a number, not just an opinion.
- The game attracted exactly the people whose tastes drive box office.
- No real money meant no regulatory barrier and near-zero cost to run.
- Public prices gave studios a cheap, continuous demand signal.
what transfers
A prediction market turns dispersed, hard-to-survey fan knowledge into a continuously updated price — often beating individual expert forecasts.
what came after
HSX kept operating after Cantor Fitzgerald acquired it in 2001, and the exchange still trades movie stocks today. The JPIM paper positioned virtual markets like HSX as a practical complement to surveys for pre-launch forecasting of creative products.
references
- Are Virtual Markets Efficient Predictors of New Product Success? The Case of the Hollywood Stock Exchange
- Logging On to Play the Market, Hollywood-Style
- 10 Key Moments in the Life of Movie Derivatives
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