Weekly Wire
Tucson Weekly Taking Stock Of The Silver Screen

By Jack Vaughn

MAY 17, 1999:  I'm not really sure I've got time to write this. Just before opening the word processing program, I checked on my Hollywood Stock Exchange (HSX for those in the know) portfolio. My Austin Powers 2 shares were down more than 3 points on heavy trading, as was my James Bond investment The World Is Not Enough. To make matters worse, rumors have been circulating that Parker Posey's bonds may adjust downward, cutting the value in half. I've got to dump those bonds and buy up shares of The Matrix to catch an upswing in weekend box office activity.

If you're wondering just what the hell I'm talking about, you must not be a movie buff with an internet connection and mass amounts of free time on your hands. The Hollywood Stock Exchange, which came into being a couple of years ago, is a simulated stock exchange for movies. It's caught on like wildfire in this relatively short period of time: at last count, there were well over 200,000 players trading shares daily in Billy Bob Thornton and The Phantom Menace (not to mention Star Wars prequels 2 and 3).

Here's how the game works:

Players sign up (the game is free) and receive 2 million "Hollywood Dollars." Using this funny money, they buy Movie Stocks and Star Bonds. Movie Stocks are shares of movies either in theaters currently or yet to be released. The share price is based on what the movie makes at the box office in the first four weeks of release, divided by 1 million. South Park The Movie, for example, is currently trading around $46. This means that the market believes the movie will take in around $46 million during its first four weeks at the box office.

Star Bonds are a little less scientific in formula, but still operate like the real bond market. The bonds are assigned a rating of AAA to C, depending on a celeb's current popularity as well as history of bringing home the hits. Tom Cruise is a AAA, Joan Cusak is a B, and Tim Curry is a CC. The bonds earn a set amount of daily interest and mature at fixed points in the year, adjusting either up or down depending on how well their movies did.

Until late last year, the buying and selling of movie stocks was limited to the most rudimentary of trades, with limited numbers depending on the stage of development of a particular film. One could, let's say, only buy 12,500 shares of Beavis and Butthead 2 for $25 each; and if he felt the movie was going to bomb, he just wouldn't buy it.

Recent changes have ushered in more sophisticated trading tools, like the issuance of options, and the ability to short a stock if the player perceives it as overvalued. Also, the cap for ownership on all stocks has been boosted to 50,000 shares, allowing players to load up on their favorite projects still in the developmental stage.

Players also get sophisticated portfolio analyses including stock and bond listings with quantity owned, purchase price, current value, percent change and the daily tick. They also receive their rank as compared to all other players (both percentile and actual number standing); the daily, weekly, monthly and yearly change in that rank; the cash and equity values of their fictional portfolio; and if desired, the standings of fellow league members.

Dozens of fan sites dedicated to providing movie information and tips have sprung up and receive a formidable number of daily hits. On these sites, one can find a hodgepodge of advance movie screening information and reviews, arbitrage hints and screen counts (the latter is a valuable tool for the HSXer, as it's vital in calculating stock prices). Some sites offer exceedingly complex mathematical formulas for price scalping and what can be construed as an early form of movie derivatives. (I've seen a formula for hedging risk on the two Joan of Arc movies slated for this summer that would floor T. Rowe Price analysts.)

However, most who play the game buy shares reflective of their fandom. As a result, the market has been uncanny in predicting the box office receipts of movies being traded. Movie company execs have been watching the Exchange for a while now, and it's been rumored that the HSX plays a small part in how much money is allocated to the marketing and promotion of their films.

This is not to say that the values of the Movie Stocks are always accurate. There have been any number of wildly incorrect bets. Titanic halted trading at $70 before the film's opening, and closed at over $200 four weeks later. Teen slasher films were also undervalued, and closed out at many times their pre-release price.

On the other hand, the bomb of the year was the notorious Babe 2: Pig in the City which, bolstered by a smash original, flirted with a $100 share price before hideously nose-diving to cash out at about $18.

Unlike other trading sites in cyberspace, however, this is fake money, and it's just a game...Or is it? In February, a top HSX player put his portfolio up for sale on online auction site eBay, where the final bid came in at over $1,000. This began a rash of portfolio sales that quickly drove down prices, even as it proved how seriously many take the game. If you've always known you could be a movie mogul, now you can put your Movie Bucks to the test.

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