CNET (I'm reading it a lot these days) ran an interesting article on Friday about SimExchange a website that seeks to simulate a predictions market for videogames. Users simply log on and use a virtual currency called DKP to predict the units they reckon a current game or console will shift in the near-future. These predictions are fed into a stock market-style display, which is actually coming up with rather accurate data on how things will pan out in the industry.

"In the exchange's best results from its predictions for April, members had bet that sales of the PlayStation Portable would come out at around 190,400 units. In fact, NPD reported Thursday, Sony sold 183,000 PSPs. So SimExchange members were off by just over 4 percent. But by comparison, Pachter had predicted sales of 200,000 PSPs, a miss of 9.29 percent."

The site's 4000 users earn nothing 'real' from making accurate predictions, but DO acculmulate points when they get things right. It's this competitive element that ensures forecasters attempt to be as accurate as possible. As the site's founder Brian Shiau explains, "People are (expressing) opinions by putting a resource on the line. They only make them strongly when they put something at risk. People care about accumulating the virtual currency. They're competing in global rankings, or with their friends."

So how do the pooled predictions on SimExhange fare against supposed industry forecast experts like the NPD Group?

Surprisingly well. Recently, Shiau sent out an email predicting what the NPD Group would report following the publication of console sales figures in April. His predictions were based on SimExchange figures:

"It turned out that Shiau's predictions weren't perfect--on average he was about 15 percent off on the sales of Nintendo's DS and Wii, Sony's PlayStation 3 and PlayStation Portable and Microsoft's Xbox 360. But he also wasn't that far off predictions from Wedbush Morgan's Michael Pachter, one of the most quoted industry analysts, who himself had been about 10.6 percent off sales on the same consoles.

And a month earlier, Shiau's predictions had actually been better than Pachter's. Shiau had been off by about 15.8 percent, while Pachter had missed by 34.9 percent."

This, of course, will come as no surprise to those who've read James Surowiecki's zeigeisty book The Wisdom of Crowds, which argues that decisions made by groups of people are often more effective than those offered by an elite few. SimExchange would appear to be the perfect example.

Which leads me to believe that Wii Vote should stop asking people about their favourite biscuits and start polling gamers on weightier issues. This could be the start of a whole new form of democracy: "Hmmm, shall I play Wario Ware or vote on the re-introduction of grammar schools?"