A Brief History of HSX

Ten years ago, I was working in an office on Wall Street with a small group of writers called the Teenage Mutant New Media Turtles. Officially, we were writing economic commentary for high net worth individuals to subscribe to on the internet. Unofficially, we spent a large part of our day trading movies on the Hollywood Stock Exchange. It was one of the most addictive websites any of us had ever seen, and of course, being New Yorkers, we all got very competitive. What's more, because movies got listed long before they were released, the site was great at building anticipation about forthcoming flicks.

Fast forward to today, and Chris Masse of Midas Oracle has republished a great piece by Trader Daily's Robert LaFranco on the rise and fall of HSX.

One of the founders is now the CEO of LionsGate; the other is a movie producer in Paris. HSX is still going as a website, having been snapped up for almost nothing by Cantor Fitzgerald after burning through $40 million during the dot-com bubble, but it never really got traction within Hollywood. Its predictions for opening-weekend grosses are as good or better than anyone in Hollywood's, but, a decade after it was founded with the intention of becoming a real trading site, it still hasn't managed to clear all the regulatory hurdles needed to allow people to trade real money. (Meanwhile, InTrade experimented with its own section for opening-weekend grosses, but it failed because you couldn't trade the gross itself, only the question of whether it would come over or under a certain point, which gave the market much less predictive power.)

Sooner or later, it seems, Cantor will finally start monetizing HSX and will get into the business of entertainment futures. But this is a cautionary tale for anybody with a dream: good ideas alone are only the beginning. Even with millions of dollars and a hugely popular website, dreams can and will often end up failing.