Blockbusters, Bombs and Sleepers: The income distribution of movies

The distribution of gross earnings of movies released each year show a distribution having a power-law tail with Pareto exponent $\alpha \simeq 2$. While this offers interesting parallels with income distributions of individuals, it is also clear that it cannot be explained by simple asset exchange models, as movies do not interact with each other directly. In fact, movies (because of the large quantity of data available on their earnings) provide the best entry-point for studying the dynamics of how ``a hit is born'' and the resulting distribution of popularity (of products or ideas). In this paper, we show evidence of Pareto law for movie income, as well as, an analysis of the time-evolution of income.Comment: 5 pages, 3 figures, to appear in Proceedings of International Workshop on Econophysics of Wealth Distributions (Econophys-Kolkata I), March 15-19, 200

The statistical laws of popularity: Universal properties of the box office dynamics of motion pictures

Are there general principles governing the process by which certain products or ideas become popular relative to other (often qualitatively similar) competitors? To investigate this question in detail, we have focused on the popularity of movies as measured by their box-office income. We observe that the log-normal distribution describes well the tail (corresponding to the most successful movies) of the empirical distributions for the total income, the income on the opening week, as well as, the weekly income per theater. This observation suggests that popularity may be the outcome of a linear multiplicative stochastic process. In addition, the distributions of the total income and the opening income show a bimodal form, with the majority of movies either performing very well or very poorly in theaters. We also observe that the gross income per theater for a movie at any point during its lifetime is, on average, inversely proportional to the period that has elapsed after its release. We argue that (i) the log-normal nature of the tail, (ii) the bimodal form of the overall gross income distribution, and (iii) the decay of gross income per theater with time as a power law, constitute the fundamental set of {\em stylized facts} (i.e., empirical "laws") that can be used to explain other observations about movie popularity. We show that, in conjunction with an assumption of a fixed lower cut-off for income per theater below which a movie is withdrawn from a cinema, these laws can be used to derive a Weibull distribution for the survival probability of movies which agrees with empirical data. The connection to extreme-value distributions suggests that popularity can be viewed as a process where a product becomes popular by avoiding failure (i.e., being pulled out from circulation) for many successive time periods. We suggest that these results may apply to popularity in general.Comment: 14 pages, 11 figure

Behind film performance in China’s changing institutional context:The impact of signals

Grounded in signaling theory, this paper investigates the signals reflecting product quality, innovativeness, reputation and cultural background which influence film performance, i.e. film survival (duration on cinema screen) and box office success, in China’s changing institutional context. This market has grown substantially and still possesses potential for further development. However, China’s unique institutional context presents challenges. By examining an expanded range of potential signals, two of which have not previously been examined in the literature, namely imported films and enhanced format film formats such as 3D and IMAX, we develop a conceptual framework and argue that signaling theory needs to be combined with institutional context. Similar to findings for film industries in other countries, we find quality and reputational signals including budget, star power, sequels, and online consumer reviews to be important in China. However, unique results are also revealed. Chinese consumers react to an innovativeness signal in that they are specifically attracted to enhanced format films. Film award nominations and prizes are insignificant reputational signals. Once other signals are taken into account, imported films on average do not perform as well as domestic films. We link these findings to China’s unique institutional setting and offer important implications for management, recognizing the challenges to film companies of competing in an increasingly globalized market. The paper is also of relevance to policymakers given their continued efforts in shaping the development of China’s film industry

Quantifying Social Influence in an Online Cultural Market

We revisit experimental data from an online cultural market in which 14,000 users interact to download songs, and develop a simple model that can explain seemingly complex outcomes. Our results suggest that individual behavior is characterized by a two-step process–the decision to sample and the decision to download a song. Contrary to conventional wisdom, social influence is material to the first step only. The model also identifies the role of placement in mediating social signals, and suggests that in this market with anonymous feedback cues, social influence serves an informational rather than normative role

The effect of social interactions in the primary life cycle of motion pictures

We model the consumption life cycle of theater attendance for single movies by taking into account the size of the targeted group and the effect of social interactions. We provide an analytical solution of such model, which we contrast with empirical data from the film industry obtaining good agreement with the diverse types of behaviors empirically found. The model grants a quantitative measure of the valorization of this cul- tural good based on the relative values of the coupling between agents who have watched the movie and those who have not. This represents a measurement of the observed quality of the good that is extracted solely from its dynamics, independently of critics reviews.Comment: 9 Pages, 3 figure

The film business in the United States and Britain during the 1930s

Film was a most important product in the lives of the people during the 1930s. This paper sets out to analyse the underlying economic arrangements of the film industries of the U.S. and Britain during the decade in producing and diffusing this commodity-type to the population at large. In doing this, the paper finds a highly competitive industry that was built around showing films that audiences wanted to see, irrespective of the extent of vertical integration. It also examines the nature of the inter-relationship between the two industries and finds an asymmetry between the popularity of British films in the American market and that of American films in the British market. Our explanation for this is that the efforts of British firms on the American market were not sufficiently sustained to make a significant impact on American audiences

The Sales Effect of Word of Mouth: A Model for Creative Goods and Estimates for Novels

Weekly sales of creative goods – like music records, movies or books – usually peak shortly after release and then decline quickly. In many cases, however, they follow a hump-shaped pattern where sales increase for some time. A popular explanation for this phenomenon is word of mouth among a population of heterogeneous buyers, but previous studies typically assume buyer homogeneity or neglect word of mouth altogether. In this paper, I study a model of new-product diffusion with heterogeneous buyers that allows for a quantification of the sales effect of word of mouth. The model includes Christmas sales as a special case. All parameters have an intuitive interpretation. Simulation results suggest that the parameters are estimable for data that are not too volatile and that cover a sufficiently large part of a title’s life cycle. I estimate the model for four exemplary novels using scanner data on weekly sales.Meistens erreichen die wöchentlichen Verkäufe von kreativen Produkten wie Musikalben, Kinofilmen oder Büchern kurz nach Veröffentlichung ihren Höhepunkt und nehmen dann schnell ab. In einigen Fällen jedoch zeigen sie einen buckelartigen Verlauf mit zunächst ansteigenden Verkäufen. Eine populäre Erklärung für dieses Phänomen beruht auf der Existenz von Mundpropaganda unter heterogenen Käufern, doch bisherige Studien gehen typischerweise von der Annahme homogener Käufer aus oder vernachlässigen Mundpropaganda gänzlich. Dieses Papier betrachtet ein Modell der Verbreitung neuer Produkte unter heterogenen Käufern, welches eine Quantifizierung der Verkaufswirkung von Mundpropaganda ermöglicht. Das Modell beinhaltet Weihnachtsverkäufe als Spezialfall. Alle Modellparameter haben eine intuitive Bedeutung. Ergebnisse einer Simulation zeigen, dass die Parameter empirisch geschätzt werden können, wenn die Daten einen hinreichend großen Teil des Verkaufszyklus eines Titels abdecken und nicht zu volatil sind. Das Modell wird auf Scannerdaten für vier exemplarische Romane angewendet

Reassessing the Integration of European Electricity Markets: A Fractional Cointegration Analysis

This study extends existing literature on the assessment of electricity market integration in Europe, by developing and testing hypotheses on the convergence of electricity wholesale prices, and adopting a time-varying fractional cointegration analysis. In addition, the potential impacts of some special events that may affect system capacity (new interconnection, market coupling, increase in share of intermittent generation) on spot and forward markets are considered and evaluated. Daily spot prices from February 2000 to March 2013 of nine European electricity spot markets (APX-UK, APX-NL, Belpex, EPEX-FR, EPEX-DE, IPEX, Nordpool, Omel and OTE) and month-ahead prices in four markets (French, British, German and Dutch) from November 2007 to December 2012 are investigated. Results show that unit root tests, which are generally used in the literature to test market integration, are inadequate for assessing electricity spot market convergence, because spot prices are found to be fractionally integrated and mean-reverting time series. Furthermore, spot price behaviour and their association with different markets change over time, reflecting changes in the EU electrical system. One-month-ahead prices, by contrast, were found to have become more resilient to shocks and to follow more stable trends

Leveraging analytics to produce compelling and profitable film content

Producing compelling film content profitably is a top priority to the long-term prosperity of the film industry. Advances in digital technologies, increasing availabilities of granular big data, rapid diffusion of analytic techniques, and intensified competition from user generated content and original content produced by Subscription Video on Demand (SVOD) platforms have created unparalleled needs and opportunities for film producers to leverage analytics in content production. Built upon the theories of value creation and film production, this article proposes a conceptual framework of key analytic techniques that film producers may engage throughout the production process, such as script analytics, talent analytics, and audience analytics. The article further synthesizes the state-of-the-art research on and applications of these analytics, discuss the prospect of leveraging analytics in film production, and suggest fruitful avenues for future research with important managerial implications

Resources, Capabilities, and Routines in Public Organizations

States, state agencies, multilateral agencies, and other non-market actors are relatively under-studied in strategic management and organization science. While important contributions to the study of public actors have been made within the agency-theoretic and transaction-cost traditions, there is little research in political economy that builds on resource-based, dynamic capabilities, and behavioral approaches to the firm. Yet public organizations can be characterized as stocks of human and non-human resources, including routines and capabilities; they can possess excess capacity in these resources; and they may grow and diversify in predictable patterns according to behavioral and Penrosean logic. This paper shows how resource-based, dynamic capabilities, and behavioral approaches to understanding public agencies and organizations shed light on their nature and governance