Abstract
Organizations employ various risk-mitigation strategies to cope with the uncertainty in marketing new products. In the motion picture industry, an important strategy is to cast star actors and actresses in movies. The ultimate box-office success, however, depends on multiple stakeholders involved with financing, making, distributing, and watching the movie. In pursuing different goals and interests, the stakeholders may look for different aspects of star power to mitigate their own risk. This paper examines how the influence of stars varies across key stakeholders in the movie market. The results show that, in general, stars have a greater impact on the stakeholders involved in the earlier stages of movie development and exhibition (where the risks are greater) than on those in later stages. Movie project financiers and exhibitors are strongly and directly influenced by star power, but news media and movie audiences are influenced less and only indirectly. Situated at the early stage of the movie “value chain,” the financiers are most concerned with stars’ past box-office performance. Exhibitors, however, are influenced by the “match” between a star’s genre participation history and the genre of a specific movie. By contrast, news media and movie audiences are influenced indirectly through the stars’ impact on earlier stakeholders and their decisions. The findings shed light on the value of employing star elements in new products, the marketing of stars, and movie promotion strategies.
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Notes
For illustration, see the series of reports in Forbes (8/6/2007, 6/12/2002, 6/19/2003, 5/17/2004).
The direct impact of box office history on opening week audiences is marginally negative (10 %). However, the strong indirect impact through opening theaters makes the total effects of box office history positive. Furthermore, the marginal negative effect could turn to non-significance in alternative estimations (see Robustness Checks).
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Acknowledgments
Angela (Xia) Liu’s research is supported in part by National Natural Science Foundation of China with grant no. 71102007. Yong Liu acknowledges the support from the Gary M. Munsinger Chair in Entrepreneurship & Innovation and summer research awards from the Eller College of Management at the University of Arizona. The authors are listed alphabetically and contributed equally to this research.
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Liu, A., Liu, Y. & Mazumdar, T. Star power in the eye of the beholder: A study of the influence of stars in the movie industry. Mark Lett 25, 385–396 (2014). https://doi.org/10.1007/s11002-013-9258-x
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DOI: https://doi.org/10.1007/s11002-013-9258-x