State Subsidies to Film and Their Effects at the Box Office: Theorizing and Measuring Why Some Genres Do Better than Others

Part of the Media Business and Innovation book series (MEDIA)


This chapter explores several theoretical approaches that can be employed to measure the performance of the movies and to assess the main factors that may influence their performance. In particular, we focus on evaluating the impact of public intervention on the movie performance and its effects on genre success at the box office. From an empirical perspective, we provide some examples to highlight the impact of public subsidies on the movie performance in Italy. To this aim, we consider quantity (box office revenues) and quality (film festival awards) as two separate indicators. Specifically, public subsidies and movie genres are employed as explanatory variables to investigate the impact of public intervention and film genre on the movie performance. In this respect, we use specific methods, such as fixed-effects approach and count models, in accordance with the type of the dependent variable under investigation. The findings show that although public funding has an overall negative impact on quantity and quality, there are some differences when considering public subsidies by genre. On balance, there is statistical evidence that dramas and thrillers are the genres that should be primarily financed by public agents.


Box office revenues Awards Public subsidies Theoretical approaches Empirical example Italy case study Film genres Film festival Film performance 


  1. Aigner, D. J., Lovell, C. A. K., & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of Econometrics, 6(1), 21–37.CrossRefGoogle Scholar
  2. Assaf, A., & Josiassen, G. A. (2015). Frontier analysis: A state-of-the-art review and meta-analysis. Journal of Travel Research, 1–16.Google Scholar
  3. Bagella, M., & Becchetti, L. (1999). The determinants of motion picture box-office performance: Evidence from motion pictures produced in Italy. Journal of Cultural Economics, 23, 237–256.CrossRefGoogle Scholar
  4. Banker, P. C., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 30, 1078–1092.CrossRefGoogle Scholar
  5. Basuroy, S., & Ravid, S. A. (2014). How relevant are experts in the internet age? Evidence from the motion pictures industry (Working Paper). University of Oklahoma.Google Scholar
  6. Belleflamme, P., & Paolini, D. (2015). Strategic promotion and release decisions for cultural goods (CORE DISCUSSION PAPER 2015/37).Google Scholar
  7. Belotti, F., Daidone, S., Ilardi, G., & Atella, V. (2012). Stochastic frontier analysis using Stata. The Stata Journal, 13(4), 1–39.Google Scholar
  8. Cameron, A. C., & Trivedi, P. K. (2013). Regression analysis of count data (2nd ed.). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  9. Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2, 429–444.CrossRefGoogle Scholar
  10. Chiou, L. (2008). The timing of movie releases: Evidence from the home video industry. International Journal of Industrial Organization, 26(5), 1059–1073.CrossRefGoogle Scholar
  11. Chisholm, D. C., Fernandez-Blanco, V., Ravid, S. A., & Walls, W. D. (2015). Economics of motion pictures: The state of the art. Journal of Cultural Economics, 39, 1–13.CrossRefGoogle Scholar
  12. Christopherson, S., & Rightor, N. (2010). The creative economy as ‘big business’: Evaluating state strategies to lure filmmakers. Journal of Planning Education and Research, 23(3), 336–352.CrossRefGoogle Scholar
  13. Coelli, T. J. (1996). A guide to DEAP version 2.1: A data envelopment analysis computer program (Working Papers 8/96). CEPA, The University of New England.Google Scholar
  14. Collins, A., & Snowball, J. (2015). Transformation, job creation and subsidies to creative industries: The case of South Africa’s film and television sector. International Journal of Cultural Policy, 21(1), 41–59.Google Scholar
  15. Collins, A., & Snowball, J. (2016). The effectiveness and impacts of subsidies to film industries. South African Cultural Observatory. First National Conference Counting Culture. The Cultural and Creative Industries in National and International Context. The Boardwalk International Convention Centre, Nelson Mandela Bay.Google Scholar
  16. De Vany, A. (2004). Hollywood economics: How extreme uncertainty shapes the film industry. London: Routledge.Google Scholar
  17. Ebbers, J. J., & Wijnberg, N. M. (2012). The effects of having more than one good reputation on distributor investments in the film industry. Journal of Cultural Economics, 36, 227–248.CrossRefGoogle Scholar
  18. Einav, L. (2007). Seasonality in the U.S. motion picture industry. Rand Journal of Economics, 38, 127–114.CrossRefGoogle Scholar
  19. Einav, L. (2010). Not all rivals look alike: Estimating an equilibrium model of the release date timing game. Economic Inquiry, 48, 369–390.CrossRefGoogle Scholar
  20. Eliashberg, J., & Shugan, S. M. (1997). Film critics: Influencers or predictors? Journal of Marketing, 61(2), 68–78.CrossRefGoogle Scholar
  21. European Treaty. (2012). EUR-Lex Access to European Union law.
  22. Fernandez-Blanco, V., Ginsburgh, V., Prieto-Rodríguez, J., & Weyers, S. (2014). As good as it gets? Blockbusters and the inequality of box office results since 1950. In J. Kaufman & D. Simonton (Eds.), The social science of the cinema (pp. 269–285). Oxford: Oxford University Press.Google Scholar
  23. Fiorito, R., & Kollintzas, T. (2004). Public goods, merit goods, and the relation between private and government consumption. European Economic Review, 48, 1367–1398.CrossRefGoogle Scholar
  24. Forte, F., & Mantovani, M. (2013). Non conventional sources on financing movies: The case of Italy. 54th Annual Conference Alma Mater Studiorum, University of Bologna, Department of Economics, 24–26 October.Google Scholar
  25. Greene, W. H. (2003). Econometric analysis (5th ed.). Upper Saddle River, NJ: Prentice-Hall.Google Scholar
  26. Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.). Boston: McGraw-Hill.Google Scholar
  27. Holbrook, M. B., & Addis, M. (2008). Art versus commerce in the movie industry: A two-path model of motion picture success. Journal of Cultural Economics, 32, 87–107.CrossRefGoogle Scholar
  28. Jansen, C. (2005). The performance of German motion pictures, profits and subsidies: Some empirical evidence. Journal of Cultural Economics, 29(3), 191–212.CrossRefGoogle Scholar
  29. Katsarova, I. (2014). An overview of Europe’s film industry. European Parliamentary Research Service.
  30. Lange, A. (2012). Film market trends and film funding in four selected European Countries. European Audiovisual Observatory, Brussels Council of Europe.Google Scholar
  31. Lee, F. L. F. (2009). Cultural discount of cinematic achievement: The academy awards and U.S. movies’ East Asian box office. Journal of Cultural Economics, 33, 239–263.CrossRefGoogle Scholar
  32. McKenzie, J., & Walls, W. D. (2013). Australian films at the Australian box-office: Performance, distribution, and subsidies. Journal of Cultural Economics, 37(2), 247–269.CrossRefGoogle Scholar
  33. Meeusen, W., & Van den Broeck, J. (1977). Efficiency estimation from Cobb-Douglas production functions with composed error. International Economic Review, 18(2), 435–444.CrossRefGoogle Scholar
  34. Meloni, G., Paolini, D., & Tena, J. D. (2014). American Beauty: Trade flows and export costs of US movies (CRENoS WP, n.2014/10).Google Scholar
  35. Meloni, G., Paolini, D., & Pulina, M. (2015). The Great Beauty: Public subsidies in the Italian Movie Industry. Italian Economic Journal, 1(3), 445–455.CrossRefGoogle Scholar
  36. Musgrave, R. A. (1959). The theory of public finance: A study in public economy. New York: McGraw-Hill.Google Scholar
  37. Pratt, A. C. (2005). Cultural industries and public policy. International Journal of Cultural Policy, 11(1), 31–44.CrossRefGoogle Scholar
  38. Simar, L., & Wilson, P. W. (2007). Estimation and inference in two-stage, semi-parametric models of production processes. Journal of Economics, 13(6), 31–64.CrossRefGoogle Scholar
  39. Teti, E., Collins, A., & Sedgwick, J. (2014). An offer they couldn’t refuse (but probably should have): The ineffectiveness of Italian state subsidies to moviemaking. Public Money and Management, 34(3), 181–188.CrossRefGoogle Scholar
  40. Waterman, D., & Jayakar, K. P. (2000). The competitive balance of the Italian and American film industries. European Journal of Communication, 15(4), 501–528.CrossRefGoogle Scholar

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.DiSEAUniversità di SassariSassariItaly
  2. 2.DiSEA and CRENoSUniversità di SassariSassariItaly
  3. 3.COREUniversité catholique de LouvainLouvain-la-NeuveBelgium
  4. 4.POLCOMING and CRENoSUniversità di SassariSassariItaly

Personalised recommendations