Hollywood Stock Exchange, creator of an Internet game that blends the hype of Hollywood and the energy of Wall Street, is in the midst of raising $10 million in venture capital and plans to go public with a stock offering, possibly by the end of the year.
HSX offers a chance for anyone to play like an entertainment mogul, buying and selling securities in movies and movie stars. The site lists more than 400 movies as "stocks" and 400 stars as "bonds."
The site was started with $500,000 in 1996 by Max Keiser, 39, a screenwriter, movie fan and retired stockbroker, and Michael Burns, 40, a managing director at Prudential Securities Group Inc. HSX has already raised more than $5 million in venture funds, including a sum from Philadelphia's Keystone Ventures, and has recently expanded its Santa Monica-based operation.
The site taps into people's desire to be wheeler-dealers, taking risks on celebrities and the movies in which they star in an effort to build the largest "investment portfolio." It also offers gossip columns and tracks each investor's growing or dwindling portfolio of celebrity securities.
There is no charge to play the game. Subscribers can sign on at http://www.hsx.com and receive 2 million "Hollywood dollars." That money can be used to invest in a list of movies in development or actors through "MovieStocks" or "StarBonds." Special features are sometimes offered, such as "Oscar Options" (bets on who will win) or "Ellen DeGeneres Coming Out Warrants" (bets on the episode's viewership total).
HSX recently added "short selling" and other more complicated trading techniques for more sophisticated players.
The site has nearly 200,000 registered traders, and about 300 million shares trade daily, roughly a third of the daily volume of the New York Stock Exchange. Volume has spiked as high as 1 billion shares a day at peak times, such as the opening weekend of the movie "Godzilla."
HSX keeps track of opening-weekend and accumulated box-office revenue, which in part determines the trading price of a movie or star. But other factors, such as bad news from the set, or a star's marriage, divorce or stint in rehab, can also affect share prices.
The recent death of legendary director Stanley Kubrick--known for classics such as "2001" and "A Clockwork Orange"--posed a dilemma for HSX operators.
"How do we handle the death of a bond?" Keiser said. "Do we call him in at zero?"
