Skip to main content
SpringerLink
Log in

Determinants of UK Box Office Success: The Impact of Quality Signals

  • Published:
Review of Industrial Organization Aims and scope Submit manuscript

Abstract

This paper analyses the roles of various quality signals in the demand for cinema attendance in the United Kingdom. Estimation of a three-stage least squares model with data for 527 films released in the United Kingdom shows that the impacts of advertising and critical reviews on box office revenues vary both in channels and magnitudes of impact. Our model treats total advertising as endogenous, alongside the number of opening screens and total box office revenues, while critical reviews are considered exogenous. Our results show that total advertising affects total box office revenue while responding endogenously to critical reviews.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Bagella M., Becchetti L. (1999) The determinants of motion picture box office performance: Evidence from movies produced in Italy. Journal of Cultural Economics 23: 237–256

    Article  Google Scholar 

  • Basuroy S., Chatterjee S., Ravid S.A. (2003) How critical are critical reviews? The box office effects of film critics, star power and budgets. Journal of Marketing 67: 103–117

    Article  Google Scholar 

  • Brewer, S., Kelley, J., & Jozefowicz, J. (2008). A blueprint for success in the US film industry’. Applied Economics 40. DOI:10.1080/00036840601007351

  • Chang B.-H., Ki E.-J. (2005) Devising a practical model for predicting theatrical movie success: Focusing on the experience good property. Journal of Media Economics 18: 247–269

    Article  Google Scholar 

  • Chevalier J., Mayzlin D. (2006) The effect of word of mouth on sales: Online book reviews. Journal of Marketing Research 43: 345–354

    Article  Google Scholar 

  • Collins A., Hand C., Snell M. (2002) What makes a blockbuster? Economic analysis of film success in the UK. Managerial and Decision Economics 23: 343–354

    Article  Google Scholar 

  • Davison A., Hinkley D. (1997) Bootstrap methods and their applications. Cambridge University Press, Cambridge

    Google Scholar 

  • Dellarocas, C., Awad, N. F., & Zhang, X. (2004). Exploring the value of online reviews to organizations: Implications for revenue forecasting and planning. MIT Working Paper.

  • Deuchart E., Adjamah K., Pauly F. (2005) For Oscar glory or Oscar money? Journal of Cultural Economics 29: 159–176

    Article  Google Scholar 

  • De Vany A., Lee C. (2001) Quality signals in information cascades and the dynamics of the distribution of motion picture box office revenues. Journal of Economic Dynamics and Control 25: 593–614

    Article  Google Scholar 

  • De Vany A., Walls W.D. (1996) Bose-Einstein dynamics and adoptive contracting in the motion picture industry. Economic Journal 106: 1493–1514

    Article  Google Scholar 

  • De Vany A., Walls W.D. (1999) Uncertainty in the movies: Can star power reduce the terror of the box office? Journal of Cultural Economics 23: 285–318

    Article  Google Scholar 

  • De Vany A., Walls W.D. (2002) Does Hollywood make too many R-rated movies? Risk, stochastic dominance and the illusion of expectations. Journal of Business 75: 425–451

    Article  Google Scholar 

  • Elberse A. (2007) The power of stars: Do star actors drive the success of movies? Journal of Marketing 71: 102–120

    Article  Google Scholar 

  • Elberse A., Anand B (2007) The effectiveness of pre-release advertising for motion pictures: An empirical investigation using a simulated market. Information Economics and Policy 19: 319–343

    Article  Google Scholar 

  • Elberse A., Eliashberg J. (2003) Demand and supply dynamics for sequentially released products in international markets: The case of motion pictures. Marketing Science 22: 329–354

    Article  Google Scholar 

  • Eliashberg J., Shugan S. (1997) Film critics: Influencers or predictors? Journal of Marketing 61: 68–78

    Article  Google Scholar 

  • Elliott, C., & Simmons, R. (2007, November). Advertising media strategies in the film industry. Paper Presented to Applied Econometrics Association Media and Communications Conference, Paris.

  • John, K., Ravid, S. A., & Sunder, J. (2004). Performance and managerial turnover: Evidence from the career paths of film directors. New York University, Mimeo.

  • Litman B. (1983) Predicting success of theatrical movies: An empirical study. Journal of Popular Culture 16: 159–175

    Article  Google Scholar 

  • Litman B., Kohl L. (1989) Predicting financial success of motion pictures: The 80s experience. Journal of Media Economics 2: 35–50

    Google Scholar 

  • MacKinnon J. (2002) Bootstrap inference in econometrics. Canadian Journal of Economics 35: 615–645

    Article  Google Scholar 

  • Moul C. (2007) Measuring word of mouth’s impact on theatrical movie admissions. Journal of Economics and Management Strategy 16: 859–892

    Article  Google Scholar 

  • Nelson P. (1970) Information and consumer behavior. Journal of Political Economy 78: 311–329

    Article  Google Scholar 

  • Nelson P. (1974) Advertising as information. Journal of Political Economy 82: 729–754

    Article  Google Scholar 

  • Nelson R., Donihue M., Waldman D., Wheaton C. (2001) What’s an Oscar worth? Economic Inquiry 39: 1–16

    Article  Google Scholar 

  • Prag J., Casavant J. (1994) An empirical study of the determinants of revenues and marketing expenditures in the motion picture industry. Journal of Cultural Economics 18: 217–235

    Article  Google Scholar 

  • Ravid S.A. (1999) Information, blockbusters and stars: A study of the film industry. Journal of Business 72: 463–492

    Article  Google Scholar 

  • Ravid S.A., Basuroy S. (2004) Managerial objectives, the R-rating puzzle and the production of violent films. Journal of Business 77: S155–S192

    Article  Google Scholar 

  • Reddy S., Swaminathan V., Motley C. (1998) Exploring the determinants of broadway show success. Journal of Marketing Research 35: 370–383

    Article  Google Scholar 

  • Reinstein D., Snyder C. (2005) The influence of expert reviews on consumer demand for experience goods: A case study of movie critics. Journal of Industrial Economics 53: 27–52

    Article  Google Scholar 

  • Robertson, T. (2003). Advertising effectiveness in UK film distribution, Report for the UK Film Council.

  • Salop S.C., Scheffman D.T. (1983) Raising rivals’ costs. American Economic Review Papers and Proceedings 73: 267–271

    Google Scholar 

  • Sawhney M., Eliashberg J. (1996) A parsimonious model for forecasting gross box office revenues of motion pictures. Marketing Science 15: 113–131

    Google Scholar 

  • Schmalensee R. (1978) A model of advertising and product quality. Journal of Political Economy 86: 485–503

    Article  Google Scholar 

  • Shapiro C., Varian H. (1999) Information rules: A strategic guide to the network economy. Harvard Business School Press, Boston

    Google Scholar 

  • Sochay S. (1994) Predicting the performance of motion pictures. Journal of Media Economics 53: 27–52

    Google Scholar 

  • Sorensen A., Rasmussen S. (2004) Is any publicity good publicity? A note on the impact of book reviews. Stanford University, Mimeo

    Google Scholar 

  • UK Film Council. (2005). UK Film Council Statistical Yearbook 2004/5. London: UK Film Council.

  • Walls W.D. (2005) Modelling heavy tails and skewness in film returns. Applied Financial Economics 15: 1181–1188

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, Lancaster University Management School, Lancaster University, Lancaster, LA1 4YX, UK

    Caroline Elliott & Rob Simmons

Authors
  1. Caroline Elliott
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Rob Simmons
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Rob Simmons.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Elliott, C., Simmons, R. Determinants of UK Box Office Success: The Impact of Quality Signals. Rev Ind Organ 33, 93–111 (2008). https://doi.org/10.1007/s11151-008-9181-0

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11151-008-9181-0

Keywords

Search

Navigation