The SimExchange: A Virtual Prediction Market for Games

Well, I just joined an extremely provocative video game sales/review prediction service called The simExchange. This is probably old news to many of you, but I just reviewed it for the first time today and let me say: I am impressed.

simExchange: the basics of a video game-specific prediction market

simExhange serves two basic functions: (1) as a portal for game enthusiasts and/or interested market researchers to share their expectations regarding either how well an upcoming game will be reviewed or how well a game will sell for in a given month; (2) as a prediction market, allowing users to use virtual currency to purchase and sell properties of newly released video games

In a nutshell, the prediction market--which is essentially a game involving performance-based contracts--investment game---goes like this (should you decide to get involved): after registering (which is free), you can view the current games listed on simExchange and buy or sell stocks and futures using simExhange's virtual currency, DKP.

DKP? What is this, a World of Warcraft raiding guild?

Well, no--it's not a guild in any sense. The creators of the program simply paid homage to that term and decided to use it for the name of their virtual currency. As far as how DKP functions in simExhange, here's the official word:

"DKP is the common currency among players in Massively Multiplayer Online (MMO) games like World of Warcraft and Everquest, earned for performance and used for bidding on items. It is also the name of the currency on the simExchange. DKP is a completely virtual currency and is not backed by real money. On the simExchange, 1 DKP of stock price corresponds to 10,000 copies sold worldwide over lifetime for a game."So the currency is a measure of how well a given game sells for over its whole lifespan. It's a completely closed market: there is no direct exchange between real dollars and DKP. This isn't Second Life. ;-)

DKP is used to make trades, analogous to its function as a method of bidding on or purchasing virtual item drops within a particular gaming community. It retains its traditional sense here, but simply changes the metric of its standard. Instead of DKP representing how well a given player has performed for her guild over a particular duration, it here represents how well a game (or console) has sold since its release.

At the most basic level, the trading process here should be pretty familiar to most of us. 1 DKP of stock=10,000 unit sales (not $10,000 worth of sales). So if Game A is trading at 250 dkp, then the market predicts that the game will sell 2,500,000 units globally over the span of its lifetime. Thus if a buyer thinks that Game A will sell for significantly better than the market prediction, he should be willing to purchase it anywhere below the 250 DKP price tag.

Earning DKP in simExchange

There are passive and active methods for earning DKP in simExchange. Examples of the former include referrals and time trust: every 15 mins. you get +250 DKP. Its capped at just 25,000 DKP, so the time trust alone won't allow you to truly rake it in. For additional information about earning DKP, you should visit the Get Started page on the official website.

One unique thing about the simExchange service is that you can submit web content, in the form of articles, and earn DKP for your efforts. I have not completely familiarized myself with this feature, but it seems that a lot of the community has taken advantage this opportunity and the result is rich, pertinent content.

This is a nice idea and meshes well with user-generated content sites such as YouTube revenue sharing(video) or Associated Content (writing). But more importantly, it gives a foundation for simExchange's educational merits. I'd recommend joining simExhange if only for this reason: there is a ton of great information about upcoming games (and consoles), their potential marketability, and strategies for more advanced trading. Speaking of that...

simExhange: advanced trading

If you activate the advanced trading option--its turned off by default--you will be able to choose between two ways of entering orders:

You can either (1) type the price you want to pay per share and the quantity of shares you want to buy or sell in the order form OR (2) you can simply click on one of the existing orders in the order book.

Essentially the advanced trading feature makes it easier for you to short sell if you think that the market's expectations for a given console or game is unjustifiably high.

Additional tutorials/explanations

As I mentioned before, the site really has a wealth of quality information. If you want to read up more on this unique service, or if you'd like additional tutorials about prediction markets, for instance, then register and check out the tutorials section.