Dan Macsai The Daily Northwestern
Sitting in an upscale café just outside Chicago, office temp Lisa Eckersberg appears decidedly un-Hollywood. Her brownish-gray hair is swept back in a wild bun. Her dark green overcoat conceals a sweatshirt with a tattered sleeve. And her mild, raspy voice carries no hint of pretension. But in recent years, 47-year-old Eckersberg has become a makeshift media mogul. A self-proclaimed "film buff," she's made a fortune brokering movie deals, gambling on coming attractions and acquiring the most bankable actors in Tinseltown. As of last week, she was netting 10 figures. "I can say, 'I'm worth over a billion dollars,'" Eckersberg says. "It's kind of fun."
Unfortunately, it's also kind of fictional.
Eckersberg, who lives in Wilmette, Ill., is one of 1.4 million users who have traded on the Hollywood Stock Exchange (www.hsx.com), where players can register for free to predict which films, stars and studios will hit - or miss - at the box office. All gamers start with $2 million in fake money ($H). If they're lucky, they can double this base in a single weekend. If they're not - well, there's always a "reset" button.
With 25,000 hits a day, HSX is the Internet's leading virtual market and a burgeoning source for big-studio market research. Dedicated users, like Eckersberg, have spent more than five years researching the latest movie deals, tracking the hottest stars and scoring the biggest payoffs. Some trade against old friends. Others play to make new ones. But for its high-ranking users - or those who aspire to the status - HSX has become a lifestyle.
COMING ATTRACTION
When Max Keiser, a stockbroker, and Michael Burns, an investment banker, launched HSX in 1996, public movie predictions were a relatively new phenomenon. Though studios still employed analysts, compiled market research and polled focus groups, without the Internet everyday audiences had little voice. "Before HSX," Eckersberg explains, "I didn't even know other people cared (about movie performance)."
During the dot-com boom, the site flourished, garnering mentions in Entertainment Weekly, Forbes and USA Today, racking up more than 700,000 users (rumored to include actors John Travolta and Drew Carey). What began as an online experiment had morphed into a mini-empire, and Keiser and Burns were suddenly industry hotshots. In 2001, they sold HSX to Cantor Fitzgerald L.P., a leading financial services provider, and Burns became a vice chair at Lionsgate Entertainment.
Because HSX security prices rise and fall in tandem with trading - buying into a "MovieStock" ups its value, selling sparks a slide - they also serve as box office predictors. Last week, for example, Spider-Man 3 (in theaters May 4), was priced at $H349, meaning the market expects a sky-high $349 million gross during its first four weeks of wide release. The Elisha Cuthbert thriller Captivity (in theaters May 18) was selling for only $H12. "When you're standing on a busy street corner in New York or L.A., people will come up to you with clipboards and ask, 'What do you think of such and such movie coming out?'" explains HSX managing director Alex Costakis, who took over in 2002. "We're doing the same thing, except we're doing it virtually."
CASHING IN
Since 1997's The Lost World: Jurassic Park opened with a then-unimaginable $72.6 million in three days - nearly a third of the movie's $229 million final gross - box office receipts have grown increasingly top-heavy. In 2006, Pirates of the Caribbean: Dead Man's Chest plundered almost a fourth of its $423 million total in just 48 hours. "Nowadays, it's very rare for films to have (staying power)," says Bill Bleich, who teaches screenwriting at Northwestern University. "They live and die by their opening weekends."
With so much riding on a movie's debut, sparking its early success - or paying someone else to do it for you - has become invaluable. In 2001, HSX launched HSX Research (www.hsxresearch.com), a subscription-based service that offers in-depth market analysis. While industry research typically begins a few weeks prior to a film's premiere, MovieStocks on HSX start trading as soon as studios give a green light. For $50,000 to $70,000 a month, the likes of Warner Bros., Lionsgate and MGM can access HSX user specs, study investment trends and gauge Internet buzz months before a movie's release date.
But HSX Research isn't perfect. Though thousands of users trade daily - providing clients with a solid sample size - by virtue of its medium (the Internet) and subject matter (box office predicting), the site attracts a demographic that's more obsessive than the general public. "GFBs," or "greasy fan boys," often pour money into a cult film to inflate its stock price, says Eckersberg. Last year's Clerks II, for example, barely earned half of its predicted $40 million. "The (Clerks director) Kevin Smith kids - that's a rabid fan-base I just don't understand," she explains. "There are a lot of people who play who just invest without thinking."
Yet, mostly, the numbers tell a different story. Famous Web-based forecasters like Brandon Gray, of Box Office Mojo (boxofficemojo.com), can usually nail a film's opening tally within 20 percent (an accuracy rate similar to that of studio analysts). But Anita Elberse, an assistant professor who teaches marketing at Harvard Business School, estimates that, on average, HSX closing prices come within 16 percent of box office receipts. (Star Wars: Episode III - Revenge of the Sith, more impressively, opened just $400,000 below its HSX estimate of $H108.8 million.) Because the site caters to "real people," not industry experts, predictions often reflect real-world demand, she says. "It's like when people gamble at the racetrack," Bleich explains. "Thirty-three percent of favorites win, so the crowd actually does a better job (picking winners) than almost anybody else."
POWER PLAYERS
On HSX, however, some crowds are better than others. With no cold cash at stake, devoted users predict for prestige - or, more specifically, a coveted spot on the "Leaderboards," where HSX ranks users based on weekly, monthly, seasonal, yearly and lifetime returns.
Ben Gatlin vows to top the charts. Every morning, 25-year-old Gatlin analyzes his $H30 million net worth. Though he's only been trading for two years, he readily admits he's addicted. "I'll do about an hour of research a day," says Gatlin, who lives in Tupelo, Miss. "If I'm on vacation, I'll find some way to get to a computer, or I'll call a friend to log in for me. I won't go more than two days without checking. It just doesn't happen."
Like many involved traders, he belongs to an HSX league, where he pits his profile against those of his closest college buddies. To help each other out, they share stock tips, investing approaches and get-rich-quick schemes. One league member, who works in Los Angeles, even occasionally leaks studio secrets. "Other people have fantasy baseball or football, and I've just never been able to get into that," says Gatlin, who graduated from the University of Missouri in 2004. "When I'm with my friends, it's all about the Hollywood Stock Exchange."
But it's still a competition. Though Gatlin has never wagered cash - "I'm too broke," he laments - if one of his stocks tanks and he loses bragging rights, it could ruin his week. "I know it's a game," he says. "But for me, this might as well be real money."
DAMAGE CONTROL
As a professor, Bleich teaches his screenwriting students to focus on creativity over competition. But HSX's emphasis on rankings, he says, can turn fans away from - and even against - quality low-grossing films. "If you're getting up every morning and rooting against a certain movie," he says, "it's not a great frame of mind."
Eckersberg agrees. Though she loves independent movies, they're largely ignored on blockbuster-driven HSX. As a result, she's forced to bet against their MovieStocks to make a profit - a process known as "shorting." "You're essentially making money when (indie) stock prices fall," she explains. "That gets pretty depressing when you like the films."
Yet after eight years of trading, Eckersberg remains active on HSX. She spends hours searching for stock tips, days pondering an investment and years forming bonds with fellow users - both on and off the site. "It's why I keep playing," says Eckersberg, who regularly socializes on HSX message boards. "If you've ever visited another (box office predicting) site, people are just stuck in their own thing. It's not like that at HSX. There's a wide variety of people, a wide variety of ages. There are people who are into sports and people who like to read." She pauses before adding, "It's not just all about movies all the time."
FINAL DESTINATION
Recently, the site has started to tinker with its 10-year-old formula. Once limited to MovieStocks, users can now purchase "Hollywood Derivatives" to predict the success of their favorite World Cup soccer team, American Idol contestant or Academy Awards nominee. (In 2005, HSX users correctly guessed all eight Oscar winners.) The point, says Costakis, is to create a "testing ground" for future additions to the site, which could include full-time sports options and TV stocks.
But like many longtime users, 37-year-old Epiphany Norton is wary of change. She's spent half a decade perfecting her technique. Now that her $H1 billion goal lies within reach, Norton is sticking to what she knows: movies. "I'm sure I could make money predicting American Idol," she says. "But, for now, I want to be pure to the game."4
Medill junior Dan Macsai is a PLAY writer. He can be reached at d-macsai@northwestern.edu.
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