Hollywood Meets The Street
The Hollywood Stock Exchange, an Internet game in which investors can buy shares in their favorite movies or stars, has had a lot in common with its real-life New York counterparts on Wall Street so far this summer.
Like on Wall Street, it's been the strong performance of the mid-sized properties - movies like Mulan and The Truman Show - that have driven the Hollywood exchange higher despite disappointing results from many blue-chip names.
Just as investors continue to pour money into Internet stocks like Yahoo, Hollywood investors also love placing speculative fantasy bets, bidding up shares of such far-off movie projects as the upcoming Star Wars and Austin Powers follow-ups to new highs.
Thanks to a big green lizard whose movie was as big of a flop as this analogy, these Hollywood investors have even experienced their own debacles.
More than a billion dollars - albeit of play money - was lost by investors who bought stakes of Godzilla, according to Max Keiser, co-founder and chairman of Santa Monica, Calif.-based Hollywood Stock Exchange.
"There's been a lot of choppiness in the market recently without too many break-outs on the upside," said Keiser, a former stockbroker who loves to use Street jargon to explain the intricacies of his game.
In the exchange, investors can buy shares not only in movie properties but in studio index funds (Disney and Seagram's Universal have been the biggest losers so far this year) and bonds for individual stars (Bruce Willis' BBB-rated bond rose while Demi Moore's BB-rated bond took a hit after their separation was announced.)
Keiser and other members of his management team don't just consider the Hollywood Stock Exchange a game, either. Sometime this fall, the company will come out with an updated version of its product, with new analytical and charting features like money flow that the company hopes movie studios will be interested in purchasing in order to gauge the public's interest for a particular movie title or star.
"We think research will be our cash cow," said Douglas Scott, chief financial officer of the company. "Just as (Wall Street analyst) Mary Meeker decides to place a sell rating on Netscape for various reasons, you can tell a lot by following the smart money in the game. These investors are trend-setters and before a movie opens, they're voting with their dollars before they vote with their dollars (at the box office)."
Studio executives are already paying attention to fan sites like the Hollywood Stock Exchange and the famous rumor-driven Ain't It Cool page, but with a somewhat skeptical eye.
"We think these sites can provide great ways to extend our brand, but we don't focus too much on them," said Lisa Crane, vice president of sales and marketing for Universal Studios Online.
In the meantime, Hollywood Stock Exchange, which has about 120,000 registered traders and recently received a $ million investment from Philadelphia-based Keystone Capital, is focusing on advertising as its primary source of revenue.
The company announced on Monday a distribution deal on Excite , where it will be featured in the movie section of the portal's entertainment channel and more deals like that are on the way, Scott said. "We believe that the name of the game right now is eyeballs and we're going to do anything we can to drive that traffic."
By Darren Chervitz