The simExchange features a two part IPO system--the second part is a day in which the price of a stock or future is fixed all day. The purpose of this phase was originally to allow everyone an opportunity to take a position in a contact from the beginning at the same price, regardless of the time of day a player logs onto the simExchange.

However, one side effect is that players can take an unlimited position at a fixed price, which greatly hinders the discovery of a true prediction. To solve this problem, the simExchange is instituting a cap on the amount a player can acquire or short in the Phase 2 IPO to 200,000 DKP worth of shares or contracts. This rule is now effective.

It's time to introduce the games for the month of October. This month we will have two games carrying over from September, and eight new titles. Two of these titles will also have global lifetime sales stocks accompanying their IPO.

NPD Futures Contracts and stocks will debut in a two phase IPO. IPO Phase 1 is a 48 hour period of trading without automated market making to determine the IPO Phase 2 price. Advanced trading mode is required to place orders in IPO Phase 1. After IPO Phase 1, the futures contracts will enter IPO Phase 2 in which the bid and ask prices will be fixed all day.

The following is the IPO Phase 1 schedule for October games:

September 16, Sunday: Microsoft's Halo 3 (Xbox 360).

September 17, Monday: Nintendo's The Legend of Zelda: Phantom Hourglass (DS).

September 18, Tuesday: Microsoft's Project Gotham Racing 4 (Xbox 360), includes lifetime stock and NPD Future. This game was submitted by d_m_shaikh.

September 19, Wednesday: Activision's Enemy Territory: Quake Wars (PC).

September 20, Thursday: Square Enix's Final Fantasy Tactics: The Lion War (PSP).

September 21, Friday: Electronic Arts' Half-Life 2: Orange Box (Xbox 360).

September 22, Saturday: Sony's Ratchet & Clank: Tools of Destruction (PS3), includes lifetime stock and NPD Future. This game was submitted by Tondog.

September 23, Sunday: Activision's Guitar Hero 3 (Xbox 360).

September 24, Monday: Activision's Guitar Hero 3 (Wii).

September 25, Tuesday: Activision's Guitar Hero 3 (PS3).

September 26, Wednesday: October Total Software Sales.

Check out Jesse's guest column on how GTA IV Delay Could Impact Short-Term PS3 Sales over at Daily Game. The article looks at sales forecasts for GTA IV and the consoles on the simExchange and discusses the implications.

This month's trading appeared to feature an interesting phenomenon. Market expectations for many video game hardware and software SKUs were more closely in line with actuals in early August trading, but were skewed upward following rumored sales results. As a result, this month's expectations ended up overly bullish.

Growth in the video game industry came inline with market predictions. Total video game software sales grew 22% from $399 million to $488 million. Final trading on The simExchange prediction market expected $502 million, just 2.87% above actual.

Sales of Microsoft's Xbox 360 slightly beat the market's expectations, selling 276,700 units while the market expected 262,900 units. The market had correctly anticipated the price cut's effect on sales growth. The remaining hardware sales underperformed the market's bullish expectations, with Sony's PS3 and PSP underperforming the most.

Trading on the simExchange in early August had predicted that Sony's price cut on the PS3 would not carry additional momentum through the month of August. Sales came in at 130,600 units. The market had predicted 140,000 - 150,000 units in early August but rumors of stronger sales in late August pushed the prediction much higher, closing at 172,600 units. Sales of the PSP came in at a disappointing 151,200 units. The market had expected 211,900 units sold.

The market traded forecast for Nintendo's Wii were also heavily affected by mid-month rumors. The forecast had traded around 370,000 units until August 23 when rumors of strong sales shot the forecast to the 430,000 unit range. Actual sales were 403,600 units. Nintendo DS was expected to sell 436,800 units, actual sales came in at 383,300 units.

As with hardware expectations, the prediction market was overly bullish on individual software SKUs this month. Interesting is that many of the early August forecasts were in line with actuals. As with the hardware sales, many forecasts shifted significantly upward following rumors of strong game sales in mid-to-late August.

Madden NFL 08 (Xbox 360) traded in the 780,000 unit range but rocketed to 1.1 million units following sales rumors. Actuals came in at 896,600 units. A similar trading pattern can be seen with BioShock (Xbox 360), which had traded in the 450,000 unit range but jumped into the 550,000 unit range in late August.

The following tables compare market expectations on the simExchange and actual results as reported by the NPD Group. We will no longer compare the prediction market's expectations with those of individual analysts due to the confusion and mischaracterization of the simExchange's trading data as analyst forecasts.

• US Hardware in August 2007

  Title	Actual units	Expected units	% Difference
  Xbox 360	276,700	262,900	-4.99%
  PLAYSTATION 3	130,600	172,600	+32.16%
  PlayStation Portable	151,200	211,900	+40.15%
  Nintendo Wii	403,600	436,000	+8.03%
  Nintendo DS	383,300	436,800	+13.96%
  Total Hardware Units	1,345,400	1,520,200	+12.99%

• US Software in August 2007

  Rank	Title	Actual units	Expected units	% Difference
  1	Madden NFL 08 (Xbox 360)	896,600	1,154,700	+28.79%
  2	Madden NFL 08 (PS2)	643,600	--	--
  3	BioShock (Xbox 360)	490,900	567,200	+15.54%
  4	Madden NFL 08 (PS3)	336,200	313,700	-6.69%
  5	Wii Play w/ Remote	256,800	--	--
  6	Metroid Prime 3: Corruption (Wii)	218,100	326,300	+49.61%
  7	Mario Strikers Charged (Wii)	147,400	--	--
  8	Guitar Hero 2 w/ Guitar (PS2)	145,400	--	--
  9	Mario Party 8 (Wii)	138,300	--	--
  10	Guitar Hero Encore: Rock the 80s (PS2)	127,100	--	--
  12	Madden NFL 08 (Wii)	115,600	109,200	-5.54%
  13	Brain Age 2 (DS)	108,500	130,300	+20.09%
  20	Tiger Woods PGA Tour 08 (Xbox 360)	71,800	109,200	+52.09%
  NR	Blue Dragon (Xbox 360)	53,600	112,700	+110.26%
  NR	Tiger Woods PGA Tour 08 (Wii)	31,900	79,900	+49.61%
  	Total Tracked Software Units	2,323,200	2,903,200	+24.97%
  	Total Software Sales	$488 million	$502 million	+2.87%

How exactly does this work?

Gamers and developers sign up on the simExchange for a free trading account. Using virtual currency called DKP, players buy virtual futures contracts that are under-predicting sales and short sell futures that are over-predicting sales. This concept is widely known as "the Wisdom of the Crowd" and this system is known as a "prediction market."

About the predictions

Predictions on the simExchange should become more accurate over time as (1) the diversity of the pool of traders increases and as (2) more accurate players are rewarded with more virtual currency for their accuracy (thereby enabling them to form more predictions) and less accurate players lose virtual currency (thereby discounting their ability to form more predictions).

Copyright and reprinting

The simExchange, LLC retains the right to the content of this article but permits the reprinting of this article with proper credit to the simExchange. Sales data published here includes data disclosed with permission by the NPD Group exclusively for the purpose of settling futures contracts on the simExchange.

Please provide you readers some context of what the simExchange is and how our forecasts work, example: "The simExchange is an online virtual stock market in which gamers, developers, and investors trade stock to predict how games will sell."

Many fellow simExchangers may be investors already or looking to get into the stock market one day. Ever thought about how the simExchange can help you become a better investor?

You already know you can practice trading on the simExchange, but what about using the simExchange as a point of research? Check out what TheStreet.com has to say in its feature on the simExchange titled "Get the Jump on Game Stocks With Virtual Market."

A long overdue feature, a recent IPOs page for futures contracts is now available. This section will show all recent futures contracts IPOs with IPO Phase 1 and Phase 2 dates.

The simExchange is continuing its consolidation of stocks listed for trading. The following stocks are candidates for delisting. These stocks were chosen for delisting due to inactivity in the stock and/or lack of discussion for an extended period of time.

All shares will cash out at the last traded price. This price is determined as the fair value as the market has not viewed the price as undervalued or overvalued for some time. These stocks will no longer appear when browsing the genres and platforms pages. You will still be able to view the stocks' pages by searching for the games.

If you feel any of the following should not be delisted, please make a case and post in this forum by 11PM on Thursday September 13:

Battlestations: Midway (Xbox 360)
Brothers in Arms (DS)
Burnout Dominator (PS2)
Call of Juarez (PC)
Call of Juarez (Xbox 360)
Command & Conquer: Tiberium Wars (Xbox 360)
Diddy Kong Racing DS (DS)
Dirt (PC)
Dragon Balll Z: Shin Budokai Another Road (PSP)
Etrian Odyssey (DS)
Full Auto 2: Battlelines (PSP)
Fuzion Frenzy 2 (Xbox 360)
Harry Potter and the Order of the Phoenix (PC)
Harry Potter and the Order of the Phoenix (DS)
Harry Potter and the Order of the Phoenix (PS2)
Harry Potter and the Order of the Phoenix (Xbox 360)
Heatseeker (PS2)
Heatseeker (PSP)
Heatseeker (Wii)
Pirates of the Caribbean: At World's End (DS)
Pirates of the Caribbean: At World's End (PC)
Pirates of the Caribbean: At World's End (PS2)
Pirates of the Caribbean: At World's End (PS3)
Pirates of the Caribbean: At World's End (PSP)
Pirates of the Caribbean: At World's End (Wii)
Pirates of the Caribbean: At World's End (Xbox 360)
Shadowrun (PC)
Shrek the Third (DS)
Shrek the Third (PS2)
Shrek the Third (PSP)
Spider-Man 3 (DS)
Spider-Man 3 (Wii)
Spider-Man 3 (PS3)
TMNT (Wii)
TMNT (Xbox 360)
Virtua Tennis 3 (PS3)
Virtua Tennis 3 (PSP)
Virtua Tennis 3 (Xbox 360)

The simExchange Research's August Sales Preview Report is now available.

We are looking for the community's input on games to be listed for October futures. If you think a game that is not mentioned here should be listed, please suggest and provide a case. Remember, we are limited to 10 software contracts. Any game selected for a futures contract that is not already listed as a stock will also have a lifetime sales stock listed. The following games have been identified as candidates for October futures:

Halo 3 (360)
Metroid Prime 3 (Wii)
The Legend of Zelda: Phantom Hourglass (DS)
Final Fantasy Tactics: The Lion War (PSP) New
Half-life 2: Orange Box (360) New
Tony Hawk (360) New
NBA Live 2008 (360) New
NBA 2k8 (360) New
Project Gotham Racing 4 (Xbox 360) New
FIFA (360) New
Conan (360) New
Simpsons Game (360) New
Hellgate: London (PC) New

Since the launch of the simExchange, the prediction market has aimed to forecast the number of units a game or console will sell. We have captured the quantity forecast for games, but we have not addressed the quality side of the games.

The simExchange is proud to announce the introduction of new contracts for forecasting game quality. The standard for quality will be Metacritic, the leading publication for review aggregation.

Metacritic futures contracts forecast the Metascore a game will receive. A Metascore is "a weighted average of all of the scores assigned by individual critics" for that game. All Metascores are between 1 and 100. Metacritic futures pay 1 DKP for each point of Metascore, so that a 90 DKP future forecasts a 90 Metascore.

The testing of Metacritic futures will begin Monday with a contract for Halo 3. This contract will enter IPO Phase 1 at 11 AM. The contract is set to freeze one week before the game's release. We will be using this opportunity to test this new type of contract, so policies regarding how this type of contract are still up to determination. Enjoy!

September 8 UPDATE: The Legend of Zelda: Phantom Hourglass (DS) has been listed for a Metacritic Future. This contract will trade slightly differently. It will continue trading until a cash out period 14 days after the game is released.