The simExchange

Infobox Website
name=The simExchange


url=http://www.thesimexchange.com
registration=Free
type=Video Game Prediction market
owner=The simExchange, LLC
author=Brian Shiau
launch date=August 29, 2006
current status=Active

The simExchange is a web-based prediction market in which players use virtual money to buy and sell stocks and futures contracts in upcoming video game properties. The main purpose of the web site is to predict trends in the video game industry, particularly how upcoming products will sell and how they will be received by the critics. For those who do not participate in the prediction market, the web site is a database of sales forecasts and game quality forecasts that are updated in real-time. The web site also features a number of "The Wisdom of Crowds"-type content collaboration and aggregation tools, including means for sharing information, articles, images, and videos about the games.

How it works

The prediction market works as a stock market game for players to predict the number of units a game or console hardware will sell or the reviews a game will receive. These predictions are made by trading global lifetime stocks, NPD Futures, and Metacritic Futures. These tradable contracts directly forecast the metric, for example: If a stock is priced at 100 DKP, this corresponds to a forecast of 1 million units. If a trader believes the product will sell more than 1 million units, then he would buy the stock, if he believes the product will sell less than 1 million units, then he would sell the stock.

DKP

DKP is the name of the virtual currency used on the simExchange.

Types of Contracts

The simExchange aims to predict both the quantitative and qualitative sides of the video game industry. It originally launched with only stocks that forecast the global lifetime sales of gaming products. On April 12, 2007, the simExchange began public testing of monthly sales futures contracts. [cite web| title = New Features Test - Monthly Futures included | url = http://www.thesimexchange.com/blogpost.php?post_id=275 | publisher = The simExchange] These later became known as NPD Futures.

Stocks

A stock on the simExchange represents the total global sales a video game product will sell through to consumers over the product's lifetime. These stocks do not have a pre-determined expiration date as some games can sell for years. [cite web| title = The structure of simExchange game stocks | url = http://www.thesimexchange.com/academia-structure.php | publisher = The simExchange]

For global lifetime stocks, 1DKP equals 10,000 copies of that game sold. For example: If a trader thinks a game will sell 234,000 copies, that would correlate to a stock price of 23.40DKP.

NPD Futures

An NPD Futures Contract is a virtual contract that predicts the data the NPD Group releases on a monthly basis. These futures cover (1) console sales, (2) game sales, and (3) total software sales. These contracts cease trading one day before NPD reports and pay out the evening NPD reports. The price of NPD Futures Contracts is similar to those of stocks, with 1 DKP price corresponding to 10,000 units sold. For example, if the Xbox 360 November Futures Contract is price at 60.00 DKP, this corresponds to a forecast of 600,000 units will be sold in the retail month of November.

Metacritic Futures

A Metacritic Futures Contract is a virtual contract that predicts the metascore, which is a weighted average of all of the scores assigned by individual critics to a particular game, that a game will receive from Metacritic. These contracts cease trading and pay out 14 days after the game's release. A Metacritic Future's price is directly related to the Metascore. For example, a 90.00 DKP price would correspond to a forecast of a 90 Metascore.

Applications

Data produced by the simExchange has been noted as a resource for real-world investors. The metrics that are forecast are fundamental factors that drive the stocks of the companies that produce the games. [cite web| title = Get the Jump on Game Stocks With Virtual Market | url = http://www.thestreet.com/s/get-the-jump-on-game-stocks-with-virtual-market/newsanalysis/techgames/10379108.html | publisher = TheStreet.com] The simExchange's prediction market data is used by Wall Street analysts, such as Michael Pachter, in their published notes and financial news outlets, such as Reuters, MarketWatch, and TheStreet.com. [cite web|title = Orange Box emerges as video game sleeper hit | url = http://www.reuters.com/article/lifestyleMolt/idUSN1623833120071019?pageNumber=2 | publisher = Reuters] [cite web|title = Will Microsoft's next Halo game slay home-entertainment rivals? | url =http://www.marketwatch.com/news/story/microsofts-next-halo-game-slay/story.aspx?guid=%7B84C2D155-A180-487B-AA51-2394209623F1%7D&dist=morenews
publisher = MarketWatch] [cite web|title = Take-Two Needs 'BioShock' Jolt | url =http://www.thestreet.com/_yahoo/newsanalysis/techgames/10375345.html
publisher = TheStreet.com]

References

External links

* [http://www.thesimexchange.com The simExchange Homepage]
* [http://news.com.com/SimExchange+aims+to+predict+video+game+market/2100-1043_3-6184970.html?tag=nefd.lede SimExchange aims to predict video game market] CNET