Predicting Movie Attendance

1
Predicting Movie Attendance

• I tried to single out a few variables that I
  found in my research to be important to
  predicting movie attendance. I dedicated at least
  a slide to each referencing an article that
  either supports my case or that may be of use for
  more detailed research. I also included a few
  models that people have come up with to predict
  movie attendance. I hope information is useful.

2
Possible variables in forecasting movie
attendance

• Release date
• Presence of top dramatic talent
• The Motion Picture Association of America (MPAA)
  rating of a film
• Genre
• Country of Origin
• Distributing Company
• Production Budget
• Promotion Efforts
• Word of mouth advertising
• Internet Presence
• Critics Reviews
• Hollywood Stock Exchange

3
Release Date

• Holiday weekends and during summer, more people
  have spare time to go to the movies
• Another important thing to consider is
  simultaneous releases or releases of potential
  block busters in a short time period
• A strong opening weekend is generally a strong
  determinant of total gross, because it is usually
  the peak of attendance (Chen, 3)
• The opening weekend of a movies release
  typically accounts for 25 of the total domestic
  box office gross- but ignores number of screens
  for the first weekend of general release may
  influence the number- international or national
  release (Simonoff and Sparrow, 1)

4
Presence of top dramatic talent (Star Power)

• Important to look not only at actors, but also
  directors
• Look at cast list of a film to see if actor(s)
  and director have been financially successful in
  the past using Top 25 Actors and Actresses from
  acclaimed entertainment channels or magazines as
  good source of data
• A Harvard study shows that the involvement of
  stars impacts movies expected theatrical movies,
  but not that it increases the valuation of film
  companies that release those movies (Elberse, 1)

5
Presence of top dramatic talent (Star Power)

• Additional Literature
• Albert, Steven. (1998) Movie Stars and the
  Distribution of Financially Successful Films in
  the Motion Picture Industry. Journal of Cultural
  Economics, 22, 249-270.
• Wallace, W. T., A. Seigerman and Morris B.
  Holbrook (1993). The Role of Actors and Actresses
  in the Success of Films How Much is a Movie Star
  Worth? Journal of Cultural Economics, 17 (1),
  1-27.
• Prag, J, and J. Casavant (1994). An Empirical
  Study of the Determinants of Revenues and
  Marketing Expenditure in the Motion Picture
  Industry. Journal of Cultural Economics, 18,
  217-235.
• Sochary, S. (1994). Predicting the Performance of
  Motion Pictures. Journal of Media Economics, 7
  (4), 1-20.
• Ravid, S. A. (1999). Information, Blockbusters,
  and Stars A Study of the Film Industry. Journal
  of Business, 72 (4), 463-492.

6
MPAA rating of a filmwww.mpaa.com

• G (general audiences)
• PG (parental guidance suggested)
• PG-13 (possibly unsuitable for children less than
  13 years of age)
• R (children not admitted unless accompanied by an
  adult)
• NC-17 (no one under 17 admitted)
• U (unrated)

7
MPAA rating of a film

• Helps determinate target audience of a film-
• G, PGs are usually targeted to children children
  usually need to be taken to the movies by
  adults, making them a somewhat limited market
  lately there has been a surge of children movies
  also largely enjoyed by adults (e.g., Shrek, Ice
  Age, and Madagascar)- if this trend continues, it
  may largely influence future forecasting
• PG-13 movies try to target early teens and older.
  Market wise, this rating the has the largest
  market potential
• Rated R, NC-17, and U are ratings whose market
  gets progressively smaller due to the audience
  restrictions at the box office

8
Genre

• 16 different genres (IMDB)
• Action Adventure Animation Biography
• Comedy Crime Documentary Drama
• Family Fantasy Film-Noir Game-Show
• History Horror Music Musical
• Mystery News Reality-TV Romance
• Sci-Fi Short Sport Talk-Show
• Thriller War Western

9
Genre

• Genre also helps determine the movies target
  audience
• For example, some movies, such as horror movies,
  are often made with the teen audience in mind
  (Simonoff and Sparrow, 5)
• Drama movies that portray thematic topics are
  usually rated PG-13 an over. In this case, a
  movie that is under the Drama genre, but rated R
  may be expected to not sell as well as a similar
  movie of the same genre that is rated PG-13
  because the audience is more limited.

10
Country of Origin

• US (American movie)
• English-speaking (but not U.S.)
• Non-English-speaking
• This article may be of help for further research
  on the topic
• Neelameghan, R. And P. Chintagunta (1999). A
  Bayesian Model to Forecast New Product
  Performance in Domestic and International
  Markets. Marketing Science, 18 (2), 115-136.

11
Distributing Company

• Reponsibilities of distributing companies
  (Tyson)
• The studio makes a licensing agreement with a
  distribution company.
• The distribution company determines how many
  copies (prints) of the film to make.
• The distribution company shows the movie
  (screening) to prospective buyers representing
  the theaters.
• The buyers negotiate with the distribution
  company on which movies they wish to lease and
  the terms of the lease agreement.
• Another next big step occurs once the
  distribution company has rights to the film. Most
  distributors not only provide the movie to
  theaters, but obtain ancillary rights to
  distribute the movie on VHS, DVD, cable and
  network TV. Other rights can include soundtrack
  CDs, posters, games, toys and other
  merchandising.
• A track record of a number of successful movies
  that made it up to the top 20 grossing films may
  be a clear indication of successful marketing and
  this trend is likely to continue for future
  releases by the same Distributing Company.

12
Production Budget

• Its hard to access the production budget- even
  when companies disclose this information its
  hard to know if the it includes for example, in
  collecting data from companies, its hard to know
  if advertising and promotion are included in the
  production budget
• Another complicating factor in measuring the
  production budget in predicting movie attendance
  may be the option with which most expensive stars
  in the movie are choosing to get paid- For
  example, in the movie Saving Private Ryan, the
  budget was of only 65 million, but the director
  and star waived their normal salary requirements
  for a participation in the films gross receipts
  (Simonof and Sparrow, 2)

13
Promotion Efforts

• Advertising, publicity, and promotion events help
  not only bring awareness to the audience, but
  also helps shape the audiences opinion of the
  movie before they even watch it
• If a preview, or advertisement does not look
  appealing, people most likely not spend time and
  money going to the theater
• If the promotion efforts are successful, positive
  word-of-mouth advertising will likely occur-
  without any additional effort from the
  distributing company

14
Word of Mouth Advertising

• Existing new product diffusion models implicitly
  assume that an individuals experience with a
  product is communicated positively through
  word-of-mouth (Mahajan and Muller, 1979)
• Some actively spread favorable word-of-moth and
  can be thought of as adding free flow of
  information which augments the flow of
  information generated through advertising
  (Mahajan, Vijay, E. Muller, and R. Kerin, 1)
• The challenge is measuring the extent that
  word-of-mouth influence in movie attendance

15
Internet Presence

• Availability not only of trailers and clips of
  the movie of the online movie databases like
  IMDB, AOL, YAHOO, and others.
• AOL also has an online database of Unscripted
  Interviews, where the people can email questions
  to be answered impromptu by the cast promotions
  such as these can really help the market
  awareness
• BLOGS are a good indicator of how strong the
  internet presence of a movie is
• A blog is not going to improve a bad movie, but
  it can certainly help generate more excitement,
  anticipation and attendance than an official
  website (Dugan).

16
Critics Review

• Article Film Critics Influencers or Predictors
• The Wall Street Journal concludes that one-third
  of moviegoers surveyed chose films because of a
  favorable review (Film Critics Influencers or
  Predictors Journal of Marketing, April 1997)(70)
• There are different theories of what the role of
  movie critics may be in relation to the box
  office, so I decided to list a few articles that
  may shed some light on the subject

17
Critics Review

• Buor, Myron (1990), Reliability of Ratings of
  movies by Professional Movie Critics,
  Psychological Reports, 67, 243-57.
• Wyatt, Robert (1990), Effects of Information
  and Evaluation in film Criticism, Journalism
  Quarterly, 67 (Summer) 359-68.
• Burzynski, Michael H. and Duwey J. Bayer (1977),
  The Effect of Positive and Negative Prior
  Information on Motion Picture Appreciation,
  Journal of Social Pyschology, 11, 215-18.

18
Hollywood Stock Exchange

• www.hsx.com
• HSX is an online stock market simulation focused
  on the movie industry
• As of January 2005, it had 500,000 registered
  users, a frequent trader group of about 80,000
  accounts, and approximately 19,500 daily unique
  logins (Elberse, 11)

19
Models

• Devising a Practical Model for Predicting
• Theatrical Movie Success Focusing on The
  Experience Good Property http//www.leaonline.co
  m/doi/pdf/10.1207/s1 5327736me1804_2?cookieSet1
• Sawhney, Mohanbir S. and Jehoshua Eliashberg
  (1996). A Parsimonious Model for Forecasting
  Gross Box-Office Revenues of Motion Picture
  Industry. Journal of Cultural Economics, 23, 4,
  (November), 319-323

20
Mentioned websites

• www.imdb.com (categorizes films and contains the
  most information on MPAA ratings, full cast
  lists, etc.)
• www.the-numbers.com (revenue information, theater
  counts, etc.)
• www.aol.com (has not only trailers, but also
  Unscrippted interviews with the cast of movies
  where they answer questions the audience has
  emailed to AOL)
• www.movies.yahoo.com

21
References

• Chen, Andrew. Forecasting Gross Revenues at the
  Movie Box Office" Department of Economics,
  University of Washington June 2002. 20 July 2006
  lthttp//www.econ.washington.edu/user/startz/OldCou
  rses/482_SP2002_studentPapers/econ-482-finalpaper
  20Chen.pdf gt.
• Simonoff, Jeffery, and Ilana Sparrow. Predicting
  movie grosses Winners and losers, blockbusters
  and sleepers . Jeffrey Simonoffs home page.
  2006 New York University. 6 August 2006
  lthttp//pages.stern.nyu.edu/jsimonof/movies/movie
  s.pdfgt.

22
References

• Elberse, Anita. Do Stars Drive Success in
  Creative Industries?" HBS Working Knowledge 2006
  Harvard University. 6 August 2006
  lthttp//www.hbswk.hbs.edu/item/5407.htmlgt.
• Tyson, Jeff. How movie Distribution Works. How
  Stuff Works. 6 Aug 2006 lthttp//electronics.howstu
  ffworks.com/movie-distribution2.htmgt.

23
References

• Mahajan, V. and E. Muller, Innovation Diffusion
  and New Product Growth Models in Marketing J
  Marketing, 43 (Fall 1979), 55-68.
• Mahajan, V. and E. Muller, R. Kerin Introduction
  Strategy for new product with positive and
  negative word-of-mouth Management Science
  (pre-1986). Dec 1984.

24
Reference

• Elberse, Anita and Jehoshua Eliashberg (2003).
  Demand and Supply Dynamics for Squentially
  Released Products in International Markets The
  Case of Motion Pictures. Marketing Science 22 (3,
  Summer), 329-354.
• Dugan, Kevin. Blogs Predict Dukes of Hazzard
  Movie Doom. Web ProNews. 2005. 8 Aug 2006
  lthttp//www.webpronews.com/news/ebusinessnews/wpn-
  45-20050806BlogsPredictDukesofHazzardMovieDoom.htm
  lgt.

25
Reference

• Film Critics Influencers or Predictors Journal
  of Marketing, April 1997)