Journal of Cultural Economics

, Volume 23, Issue 4, pp 285–318 | Cite as

Uncertainty in the Movie Industry: Does Star Power Reduce the Terror of the Box Office?

  • Arthur De Vany
  • W. David Walls


Everyone knows that the movie business is risky. But how risky is it? Do strategies exist that reduce risk? We investigate these questions using a sample of over 2000 motion pictures. We discover that box-office revenues are asymptotically Pareto-distributed and have infinite variance. The mean is dominated by rare blockbuster movies that are located in the far right tail. There is no typical movie because box-office revenue outcomes do not converge to an average: revenues diverge over all scales. The studio model of risk management lacks a foundation in theory or evidence, and revenue forecasts have zero precision. Movies are complex products and the cascade of information among film-goers during the course of a film's run can evolve along so many paths that it is impossible to attribute the success of a movie to individual causal factors. The audience makes a movie a hit and no amount of “star power” or marketing can alter that. The real star is the movie.

star power Pareto law motion picture industry 


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Copyright information

© Kluwer Academic Publishers 1999

Authors and Affiliations

  • Arthur De Vany
    • 1
  • W. David Walls
    • 2
  1. 1.Department of Economics, Institute for Mathematical Behavioral SciencesUniversity of CaliforniaIrvineU.S.A
  2. 2.School of Economics and FinanceThe University of Hong KongHong Kong

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