It’s not the economy, stupid! External effects on the supply and demand of cinema entertainment

Abstract

The paper addresses whether the state of the economy impacts the supply of and demand for cinema entertainment. A literature review on the drivers of cinema supply and demand is provided, and two competing hypotheses are extracted. Economic downturns could either lead to a sober mood and drive the interest in serious genres or drive the need for distraction leading to an increased interest in feel-good or action movies. However, characteristics of the movie industry suggest that economic key factors have only limited effects on supply and demand. A time series analysis of supply and demand in three major European markets indicate that demand is unrelated to the state of the economy. In aggregate, the demand does not instruct supply. Fluctuations in individual movie quality superpose potential effects of the economic context on the aggregated demand. Simultaneously, a focus on film as art superposes potential effects of the economic context on the supply.

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Notes

  1. 1.

    Wyatt (1994) is an exception here. However, his description of the emergence of the “high concept” movie is about making a movie a marketable package independent of the genre.

  2. 2.

    Supply in this context refers solely to distribution decisions whether to rush a movie to market, withhold another one, or pick up movies of a certain genre from independent producers. The planning horizon for feature films is far too long to accurately address the possible state of the economy when the movie is released after 2–4 years. The state of the economy might just as well influence the mindset of screenwriters and producers; however, these potential effects are superposed during the production cycle.

  3. 3.

    This quality score is somewhat problematic, since all user votes ever entered on IMDb are included. IMDb does not allow to create scores using only votes from one country or a certain time span. We can expect that this kind of overall measurement reduces actual differences.

  4. 4.

    Only in some cases, there is a secondary genre indicated.

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Correspondence to M. Bjørn von Rimscha.

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von Rimscha, M.B. It’s not the economy, stupid! External effects on the supply and demand of cinema entertainment. J Cult Econ 37, 433–455 (2013). https://doi.org/10.1007/s10824-012-9192-4

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Keywords

  • Movie industry
  • Cinema demand
  • Genre
  • Consumer confidence
  • Economic growth
  • Historic events

JEL Classification

  • L82
  • C23