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How do your rivals’ releasing dates affect your box office?

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Abstract

In this paper, we study to what extent a movie’s box-office receipts are affected by the temporal distribution of rival films. We propose a reduced-form empirical model to measure and test competition effects among films released close to each other in a standard regression framework. Such an analysis is appealing in terms of its policy implication and may provide guidance to distributors to decide on their releasing dates of their firms. We estimate this model using information on the films released in five countries: the USA, the United Kingdom, Germany, France and Spain. The geographical dimension of our data set permits us to control for unobserved heterogeneity among films released using panel data techniques, which allows us to evaluate the individual and specific effects of each film. Thus we deal with one of the most relevant features of the movie market, namely the presence of highly differentiated products.

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Notes

  1. Evidence can be found in Krider and Weinberg (1998), Krider et al. (2005), and Kanzler (2011).

  2. Einav (2007) found that the underlying seasonality of box-office revenues is amplified by the seasonality in the number and quality of available movies. However, as the underlying demand accounts for about two-thirds of the observed seasonal variation in total sales, we will try to control for this underlying seasonality in our empirical application.

  3. See Moul and Shugan (2005), Vogel (2007) and Radas and Shugan (1998).

  4. For instance, a good performance during the first weekend might create a positive word-of-mouth effect, capturing the attention of the public, media and exhibitors (De Vany 2004).

  5. We can observe some price discrimination, but this is in terms of days, seasons or consumer groups, not among movies. The exception is the case of 3-D movies, but these can be considered as a different commodity.

  6. See Hadida (2009) and McKenzie (2012) for a summary of this literature.

  7. However, Basuroy et al. (2006) have found that ongoing films’ competition for screens has a positive effect on weekly box-office receipts and screen coverage.

  8. See Ginsburgh and Weyers (1999), Ravid (1999), Hennig-Thurau et al. (2006).

  9. For more details, see the theoretical model developed in Gutiérrez-Navratil et al. (2011).

  10. Due to data limitations, the market share in France has been computed using total attendance instead of total box-office revenues.

  11. We focus our analysis on the most potentially harmful rival films, those released during the period from 3 weeks before to 3 weeks after movie i’s release.

  12. We just used three categories since we had to harmonize rating scales that differ across countries. The general audience group includes films suitable for all age groups and for children over 6 years (G and PG rating). The restricted audience group includes films more suitable for ages over 17 years (R rating) and the teenager audiences group includes films suitable for teenagers (PG-13).

  13. We use an F test to test whether the film-specific constant terms (α i ) are all equal. We obtain a value of 5.23, which far exceeds any critical value of an F(2810, 9030). Therefore, we reject the null hypothesis in favor of the individual effects model.

  14. We follow Cameron and Trivedi (2009), who use the method of Wooldridge (2002).

  15. The value for the F(16, 2810) statistic is 115.64, above any critical value, so we strongly reject the null hypothesis that the individual effects and explanatory variables are uncorrelated.

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Acknowledgments

This research has been funded with support from: the Department of Education, Universities and Research of the Basque Government; the European Commission (EU Culture Programme project #2012-0298/001); the Government of Spain (projects #ECO2011-27896, #ECO2010-17590 and #ECO2010-17240). It reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

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  1. Departamento de Economia, Facultad de Economia y Empresa, University of Oviedo, Avenida del Cristo s/n, 33006, Oviedo, Spain

    Fernanda Gutierrez-Navratil, Victor Fernandez-Blanco, Luis Orea & Juan Prieto-Rodriguez

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  1. Fernanda Gutierrez-Navratil
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  2. Victor Fernandez-Blanco
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Correspondence to Fernanda Gutierrez-Navratil.

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Gutierrez-Navratil, F., Fernandez-Blanco, V., Orea, L. et al. How do your rivals’ releasing dates affect your box office?. J Cult Econ 38, 71–84 (2014). https://doi.org/10.1007/s10824-012-9188-0

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