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Managing Risk in the Film Business—Key Concepts and Methods

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Towards a Comparative Economic History of Cinema, 1930–1970

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Abstract

Box office is a measure of film popularity—the films people choose from an array made available for public consumption. While producer risk is a well-documented concept, commonly encapsulated in the so-called ‘nobody knows’ principle, consumer risk is less well-understood. Both are discussed. The POPSTAT method by which box office is estimated from programming data in the absence of archive evidence is also covered in this chapter. Its derivative RelPOP is used to make a comparative analysis of film popularity. Attention is also given to the International Orientation Index developed by Peter Miskell to explain the relative attractiveness of Hollywood movies in foreign markets. In addition, the importance of trade journals as a source of information and data and microeconomic concepts central to the investigation of industry behaviour are explained.

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Notes

  1. 1.

    For a discussion of product differentiation applied to the film industry, see Sedgwick (2002) and Sedgwick et al. (2019, pp. 202–203).

  2. 2.

    Bakker (2008).

  3. 3.

    Nelson (1970, 1974).

  4. 4.

    Ratner et al. (1999).

  5. 5.

    Of course, it was in the interests of producers and distributors to remove films from the market as soon as consumers tired of them, effectively ending their lives as commodities, since films of vintage would stand in direct competition with new films released. The practice of re-releasing past films become common in the United States during the Second World War owing to film shortages. During the 1950s, the practice continued but was always limited to a small number of special films. The market was never awash with films of vintage, as was the case in the market for classical music recordings.

  6. 6.

    Handel (1950, p. 70). For a fuller contribution of Handel’s contribution to film consumer behaviour see Bakker (2003) and Sedgwick and Pokorny (2010).

  7. 7.

    See for instance, Kuhn (2002) and Treveri Gennari (2015).

  8. 8.

    These ideas are developed in Sedgwick (2000, 2007).

  9. 9.

    Arsel and Bean (2013).

  10. 10.

    Hennion (2007, p. 101).

  11. 11.

    Arsel and Bean (2013, p. 901).

  12. 12.

    Moretti (2011, p. 2). See also Ginsburgh and Weyers (1999).

  13. 13.

    Moretti (2011, p. 1).

  14. 14.

    This calculation includes both domestic and foreign rental incomes. For the method of estimating distribution costs for films from the Warner Bros. studio see Pokorny and Sedgwick (2010, Appendix).

  15. 15.

    Glancy (1992, 1995) and Jewell (1994).

  16. 16.

    Sedgwick and Pokorny (2005, pp. 98–103).

  17. 17.

    Sedgwick and Pokorny (1998) and Pokorny and Sedgwick (2001).

  18. 18.

    See Pokorny and Sedgwick (2010) for a long history of the profitability of Hollywood studios; and Pokorny et al. (2019) for an account of the significance of sequels to studio profitability in recent times.

  19. 19.

    Pokorny et al. (2019).

  20. 20.

    See also various chapters in De Vany (2004).

  21. 21.

    Variety, 6 November 1934.

  22. 22.

    Of those below the line only Sweden had a substantial film production sector during the the 1930s.

  23. 23.

    Commonwealth Bureau of Census and Statistics (1936), found in The Official yearbook of the Commonwealth of Australia.

  24. 24.

    Glancy (1999), Vasey (1997), and Jarvie (1992).

  25. 25.

    Miskell (2016, pp. 20–21).

  26. 26.

    Sedgwick (1994). Kinematograph Weekly published a column ‘Showing Next Week’. For the week commencing 5 March 1934 the cities of London (13 cinemas), Birmingham (5), Bradford (2), Bristol (9), Cardiff (5), Edinburgh (8), Glasgow (10), Leeds (7), Liverpool (7), Newcastle (5), and Sheffield (7) were represented. Unfortunately, the coverage of cities and cinemas is not always consistent. For instance, in the 5 March issue the first-run cinemas of Manchester are missing. Where this happens, the programmes were found in advertisements in local evening newspapers.

  27. 27.

    Sedgwick (2000).

  28. 28.

    Harper (2004) and Sedgwick (2006).

  29. 29.

    From data collected by Karina Pryt and her team at Goethe University, Frankfurt, kindly shared with the author.

  30. 30.

    This is done in Chapter “Film Exhibition, Distribution and Popularity in German-Occupied Belgium (19401944): Brussels, Antwerp and Liege”, with regards to the post-war Italian film industry.

  31. 31.

    Floud (1979, p. 170).

  32. 32.

    Pafort-Overduin (2012).

  33. 33.

    Sedgwick et al. (2012).

  34. 34.

    Joseph Garncarz (2020).

  35. 35.

    The POPSTAT values are based on attributing equal billing weights (0.5) to each film sharing a double bill programme.

  36. 36.

    One film if the population is an odd number, two films (averaged) in the case of an even numbered population.

  37. 37.

    RelPOP was first introduced in Sedgwick et al. (2019) when analysing actual box-office data gathered by an Italian trade body for the Italian film market, 1957–1966.

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Sedgwick, J. (2022). Managing Risk in the Film Business—Key Concepts and Methods. In: Sedgwick, J. (eds) Towards a Comparative Economic History of Cinema, 1930–1970. Frontiers in Economic History . Springer, Cham. https://doi.org/10.1007/978-3-031-05770-0_2

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