HSX moves keep Netco afloat

Bowing in 1996 as an exchange to fund independent films, the Hollywood Stock Exchange has reinvented itself more often than Madonna. True to form, HSX recently announced two unique programs that build on their high-traffic, low-profit virtual gaming site.

Until recently, HSX had operated as a banner-ad based business, which, simply put, wasn’t working. Andy Kaplan, former executive VP at Columbia TriStar Television Group, has since ankled his post as CEO.

Operating under an executive committee, HSX has made some major changes that may prove the company more nimble and savvy than many critics thought.

Weeks away from running out of cash, HSX merged with Predict It, a virtual stock game for sports enthusiasts. The merger brought a much-needed $10 million in additional funds.

The site then bowed its “virtual producer” program that offers Netizens insider production materials from Lions Gate’s upcoming “Shadow of the Vampire,” the first movie from Nicolas Cage’s Saturn Films.

Charging a subscription fee of up to $50, users will also receive some or all of the following: credit on the DVD, the DVD itself, tickets to the movie’s screening and other incentives.

And after “Vampire” hits theaters Dec. 29, users share in the film’s profits, depending on the film’s domestic performance. Virtual-producer profits grow cumulatively with the film’s B.O. take, maxing out at a shared $500,000.

Despite interesting incentives, the program can hardly be considered a hit, attracting only 1,000 subscribers by the third week.

“We aren’t doing the numbers that we thought we would, but we really haven’t ramped up the marketing,” says Douglas Scott, HSX’s executive vice president.

But Scott says that user numbers have been growing steadily. Also, several studios have expressed interest, as HSX offers a way to market a movie before it’s made while producing special footage for the pic’s DVD.

Exactly how HSX will do that remains unclear. “Vampire” is already in the can, so the “virtual-producer” program has yet to cover an in-production movie.

Fearful of negative buzz, both are notoriously cautious about releasing publicity materials from untested pics, which would create a fundamental flaw in the program.

Although the ink hasn’t dried on the program’s future films, Scott has already taken steps to ensure that the program isn’t bogged down by bureaucracy by “identifying the one person with the authority to make final decisions,” say Scott.

Money, of course, is another issue. Although they installed a new pay-to-play model which differs from their original free game, HSX shares subscription fees with studios.

“In the case of Saturn, they are taking more than we are,” says Scott.

However, HSX plans to score with its business-to-business site that will forecast future entertainment industry trends.

Tentatively titled HSXResearch.com, the service taps into HSX’s 700,000 registered users and offer demographic breakdowns of awareness, interest and appeal of specific film, TV and music properties and artists.

“How does an equity analyst gauge what’s in the pipeline when he’s looking at Viacom or Sony?” asks Brian Dearth, vice president of research. “Is he going to listen to their pitches? According to the studios, they don’t have a bad project. But they have projects that won’t deliver on certain demos. And they have some projects that are really good. What we will deliver is long lead awareness.”

HSX will compile the data by following the trading of subscribers’ virtual stocks and through direct surveys. HSX plans to supply companies with data on product placement and promotional potential within these properties as well. The service will be subscription based. No price for the service has yet been set, but Dearth envisions “a fairly hefty fee for a subscription.”

“This is going to pay the bills at HSX,” says Dearth. “Research will provide more than its fair share of revenue.”

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