US Gross Ratios by Genre, 1991 to 2010

Recently I have been looking at the breakdown of the top 50 films at the US box office in each year from 1991 to 2010 by genre. I’ll have more to say on this topic in a couple of weeks, but I have looked at several different variables and have had to excise some aspects from the paper I was writing. This means I have some graphs left over – one of the most interesting of which is presented below. This boxplot shows the distribution of the ratio of the opening weekend gross to the total gross for the 1000 films in my sample. The box office data this graph is based on has been inflation adjusted to 2010 dollars. ‘Other’ includes genres that were too infrequent to be included separately, and is comprised of documentaries, musicals, war films, and westerns. (Actually this graph includes data from only 999 films, as one of the documentaries included in the category ‘other’ has no reported opening weekend gross). The summary statistics are given in Table 1 below.

Figure 1 Opening/total gross ratios by genre in the top 50 films at the US box office, 1991 to 2010 (Source: Box Office Mojo)

Table 1 Opening/total gross ratios by genre in the top 50 films at the US box office, 1991 to 2010 (Source: Box Office Mojo)

The overall median for 999 films is 0.2436; and so of the gross accumulated by these films, a quarter is taken in the opening weekends alone.

Three features stand out from this data:

• Horror films have the highest median gross ratio of any genre, and tend to open big before falling away quite dramatically. Box office Mojo has chart views of the daily box office gross for films released in the US; and it is interesting to compare the charts for Saw IV (2007), which ran out of steam after less than a month on release, and Paranormal Activity (2009), which did not reach its peak gross until after a month. The gross ratio for the former film is 0.5017, and that of the latter is 0.0007. These films are the extremes of the data values for the genre.
• The genres of action/adventure, family, and fantasy/science fiction tend not to have films with very low gross ratios – of the 410 films in these three genres, only 13 have very low gross ratios (and ten of these are family films). Action/adventure and fantasy/science fiction tend to have higher gross ratios, and so the opening weekend is more important for these genres. The distribution for family films is more consistent with comedy, crime/thriller, and romance films. These films tend to make a big initial splash, and rarely have the opportunity to build an audience over time.
• Drama films have the lowest gross ratios; and of the 109 films in this category in the sample, 33 have an opening weekend of less than $1 million. This is the result of films in this genre being initially released to a small number of screens and allowing the film to build an audience on the basis of critical reviews and word of mouth. Drama films are therefore characterised by a particular release pattern that it is not evident in the other genres, and the opening weekend gross is unreliable as a predictor of the total gross.

The above graph is a very simple plot of a simple calculation performed on some easily obtained data, but we can immediately see how different genres find their way into the film market in the US. These patterns are even stronger when we look at box office data sorted by genre in more detail, as will become clear when I put up the full paper in a couple of weeks.

Determining box office success

I had not actually planned to write anything this week because someone said that the world was going to end on Saturday.

It didn’t.

And so this week I present a collection of papers on the factors that shape the box office performance of films. The majority of these papers are the final versions from university research depositories, but some may be pre-prints or drafts so check before you cite.

The best place to start is undoubtedly this paper from Jehoshua Eliashberg, Anita Elberse, and Mark A.A.M. Leenders from 2006, which provides a summary of research in this area and illustrates the type of research carried out in the fields of economics, retailing, and marketing that is entirely absent from film studies texts.

Eliashberg J, Elberse A, and Leenders MAAM 2006 The motion picture industry: critical issues in practice, current research, and new research directions, Marketing Sceince 25 (6): 638-661.

The motion picture industry has provided a fruitful research domain for scholars in marketing and other disciplines. The industry has high economic importance and is appealing to researchers because it offers both rich data that cover the entire product lifecycle for many new products and because it provides many unsolved “puzzles.” Although the amount of scholarly research in this area is rapidly growing, its impact on practice has not been as significant as in other industries (e.g., consumer packaged goods). In this article, we discuss critical practical issues for the motion picture industry, review existing knowledge on those issues, and outline promising research directions. Our review is organized around the three key stages in the value chain for theatrical motion pictures: production, distribution, and exhibition. Focusing on what we believe are critical managerial issues, we propose various conjectures—framed either as research challenges or specific research hypotheses—related to each stage in the value chain and often involved in understanding consumer moviegoing behavior.

The web page of Jehoshua Eliashberg at Wharton is here, and that of Anita Elberse at Harvard Business School is here. The webpage for Mark Leenders is here, and features the intriguing quote, “Hollywood movies and medicines are very similar from a marketing perspective.”

Basuroy S, Chetterjee S, and Ravid SA 2003 How critical are critical reviews? The box office effects of film critics, star power, and budgets, Journal of Marketing 67 (4): 103-117.

The authors investigate how critics affect the box office performance of films and how the effects may be moderated by stars and budgets. The authors examine the process through which critics affect box office revenue, that is, whether they influence the decision of the film going public (their role as influencers), merely predict the decision (their role as predictors), or do both. They find that both positive and negative reviews are correlated with weekly box office revenue over an eight-week period, suggesting that critics play a dual role: They can influence and predict box office revenue. However, the authors find the impact of negative reviews (but not positive reviews) to diminish over time, a pattern that is more consistent with critics’ role as influencers. The authors then compare the positive impact of good reviews with the negative impact of bad reviews to find that film reviews evidence a negativity bias; that is, negative reviews hurt performance more than positive reviews help performance, but only during the first week of a film’s run. Finally, the authors examine two key moderators of critical reviews, stars and budgets, and find that popular stars and big budgets enhance box office revenue for films that receive more negative critical reviews than positive critical reviews but do little for films that receive more positive reviews than negative reviews. Taken together, the findings not only replicate and extend prior research on critical reviews and box office performance but also offer insight into how film studios can strategically manage the review process to enhance box office revenue.

The web page of Suman Basuroy at The University of Oklahoma is here, and has links to his many papers on the marketing of motion pictures.

Craig S, Douglas S, and Greene W 2003 Culture matters: a hierarchical linear random parameters model for predicting success of US films in foreign markets, Manuscript, Department of Marketing, Stern School of Business, NYU.

Culture matters in ways that are salient for products with significant cultural content. In particular, the cultural context in which a product is launched plays an important role in its success. The present study examines the impact of cultural context on the box office performance of US films in foreign markets. A hierarchical linear random parameters model is used to assess the impact of national culture, degree of Americanization, US box office and film genre on performance in eight foreign markets. The model allowed for film-specific heterogeneity to be accounted for and for hypotheses to be tested at both the film level and the country level. Results indicate that films perform better in countries that are culturally closer to the US and those that have a higher degree of Americanization. The genre of the film and US box office success also had a significant impact on performance. Some implications are drawn for managers releasing films in foreign markets.

Dellarocas C, Farag NA, and Zhang X 2005 Using online ratings as a proxy of word-of-mouth in motion picture revenue forecasting, SSRN Working Paper.

The emergence of online product review forums has enabled firms to monitor consumer opinions about their products in real-time by mining publicly available information from the Internet. This paper studies the value of online product ratings in revenue forecasting of new experience goods. Our objective is to understand what metrics of online ratings are the most informative indicators of a product’s future sales and how the explanatory power of such metrics compares to that of other variables that have traditionally been used for similar purposes in the past. We focus our attention on online movie ratings and incorporate our findings into practical motion picture revenue forecasting models that use very early (opening weekend) box office and movie ratings data to generate remarkably accurate forecasts of a movie’s future revenue trajectory. Among the metrics of online ratings we considered, we found the valence of user ratings to be the most significant explanatory variable. The gender diversity of online raters was also significant, supporting the theory that word-of-mouth that is more widely dispersed among different social groups is more effective. Interestingly, our analysis found user ratings to be more influential in predicting future revenues than average professional critic reviews. Overall, our study has established that online ratings are a useful source of information about a movie’s long-term prospects, enabling exhibitors and distributors to obtain revenue forecasts of a given accuracy sooner than with older techniques.

Elberse A 2007 The power of stars: do star actors drive the success of movies?, Journal of Marketing 71 (4): 102-120.

Is the involvement of stars critical to the success of motion pictures? Film studios, which regularly pay multimillion-dollar fees to stars, seem to be driven by that belief. This article sheds light on the returns on this investment using an event study that considers the impact of more than 1200 casting announcements on trading behavior in a simulated and real stock market setting. The author finds evidence that the involvement of stars affects movies’ expected theatrical revenues and provides insight into the magnitude of this effect. For example, the estimates suggest that, on average, stars are worth approximately $3 million in theatrical revenues. In a cross-sectional analysis grounded in the literature on group dynamics, the author also examines the determinants of the magnitude of stars’ impact on expected revenues. Among other things, the author shows that the stronger a cast already is, the greater is the impact of a newly recruited star with a track record of box office successes or with a strong artistic reputation. Finally, in an extension to the study, the author does not find that the involvement of stars in movies increases the valuation of film companies that release the movies, thus providing insufficient grounds to conclude that stars add more value than they capture. The author discusses implications for managers in the motion picture industry.

Elliot C and Simmons R 2007 Determinants of UK Box Office Success: The Impact of Quality Signals, Lancaster University Management School Working Paper 2007/012.

This paper analyses the roles of various potential quality signals in the demand for cinema in the United Kingdom using a breakdown of advertising totals by media category. Estimation of a two stage least squares model with data for 546 films released in the United Kingdom shows that the impacts of types of advertising on box office revenues vary both in channels and magnitudes of impact. We also offer a more sophisticated treatment of critical reviews than hitherto by examining the spread (entropy) rather than just the mean rating.

Hennig-Thurau T, Houston MB, Sridhar S 2006 Can good marketing carry a bad product? Evidence from the motion picture industry, Marketing Letters 17 (3): 205-219.

We examine the relative roles of marketing actions and product quality in determining commercial success. Using the motion picture context, in which product quality is difficult for consumers to anticipate and information on product success is available for different points in time, we model the effects of studio actions and movie quality on a movie’s sales during different phases of its theatrical run. For a sample of 331 recent motion pictures, structural equation modeling demonstrates that studio actions primarily influence early box office results, whereas movie quality influences both short- and long-term theatrical outcomes. The core results are robust across moderating conditions. We identify two data segments with follow-up latent class regressions and explore the degree of studio actions needed to “save” movies of varying quality.We finally offer some implications for research and management.

Hennig-Thurau T, Walsh G, and Bode M 2004 Exporting media products: understanding the success and failure of hollywood movies in Germany, Advances in Consumer Research 31 (1): 633-638.

Rising production costs in the US motion picture industry make overseas markets essential for movie studios’ economic survival. However, movie marketers can rarely build on systematic research when attempting to customize movies or movie-related communications to different cultural settings. In this paper, we draw from cultural theory to develop a conceptual framework of US movies’ success in foreign markets. Propositions are then developed that offer insight into the differing impact of a number of factors on movie success in the US and Germany. Marketing implications will be discussed.

The webpage for Thorsten Hennig-Thurau at the Cass Business School is here.

Sharda R and Delen D 2006 Predicting box-office success of motion pictures with neural networks, Expert Systems with Applications 30 (2): 243-254. [NB: although there is no specific URL associated with it, there is a downloadable version of this paper which you will find if your search for the title in Google Scholar].

Predicting box-office receipts of a particular motion picture has intrigued many scholars and industry leaders as a difficult and challenging problem. In this study, the use of neural networks in predicting the financial performance of a movie at the box-office before its theatrical release is explored. In our model, the forecasting problem is converted into a classification problem-rather than forecasting the point estimate of box-office receipts, a movie based on its box-office receipts in one of nine categories is classified, ranging from a ‘flop’ to a ‘blockbuster.’ Because our model is designed to predict the expected revenue range of a movie before its theatrical release, it can be used as a powerful decision aid by studios, distributors, and exhibitors. Our prediction results is presented using two performance measures: average percent success rate of classifying a movie’s success exactly, or within one class of its actual performance. Comparison of our neural network to models proposed in the recent literature as well as other statistical techniques using a 10-fold cross validation methodology shows that the neural networks do a much better job of predicting in this setting.

Terry N, Butler M, and De’Armond D 2005 The determinants of domestic box office performance in the motion picture industry, Southwestern Economic Review 32: 137-148.

This paper examines the determinants of box office revenue in the motion picture industry. The sample consists of 505 films released during 2001-2003. Regression results indicate the primary determinants of box office earnings are critic reviews, award nominations, sequels, Motion Picture Association of America rating, budget, and release exposure. Specific results include the observation that a ten percent increase in critical approval garners an extra seven million dollars at the box office, an academy award nomination is worth six million dollars, the built in audience from sequels are worth eighteen million dollars, and R-rated movies are penalized twelve million dollars.

The Top 100 in Three Countries

In some earlier posts I looked at the clustering of films at the UK box office based on their opening and total grosses from 2007 to 2009: see here and here. This post updates the UK data to include the top 100 films at the UK box office in 2010, and also looks at the top 100 in France and Germany in the same year.

Data on the total and opening weekend (including previews) box office gross was collected from Box Office Mojo. Gross data on Box Office Mojo is given in US dollars, and – unless otherwise stated – to make direct comparisons between the different countries I have left this as it is and have not corrected the data to pounds and Euros. (To compare this UK data to that in earlier posts it is necessary to multiply the box office gross in US dollars by 0.65 to convert to pounds). To sort the data into groups, the opening weekend gross (including previews) and the total box office data were entered into PAST (v. 2.06) and then allocated by using k-means clustering into 5 groups. Data was missing for some films so the plots do not actually include the top 100 for each country: 3 films are missing for the UK data, four from Germany, and 2 from France.

It is clear from the data in Figures 1 through 3, that there is a strong correlation between the opening weekend gross of a film and its total box office revenue in all countries. The Spearman rank correlation for the UK is rs (95) = 0.8988, p = <0.0001. For Germany, rs (94) = 0.8537, p = < 0.0001; and for France rs (96) = 0.8991, p = <0.0001. In the UK the mean proportion of a film’s total gross accounted for by its opening weekend is 0.30 (95% CI: 0.28, 0.32). For Germany, the mean proportion is 0.27 (95% CI: 0.25, 0.29); and for France it is 0.34 (95% CI: 0.32, 0.37). This indicates that the opening weekend in France is a stronger predictor of overall box office gross in France than in Germany or the UK, though not by much.

The UK data is presented in Figure 1, and looks very like the plots of the box office grosses from earlier posts covering the period 2007 to 2009. We have two films (Toy Story 3 and Harry Potter and the Deathly Hallows (Part One)) that easily outperformed everything else. The black cluster includes four films (Alice in Wonderland, Inception, Shrek Forever After, The Twilight Saga: Eclipse) that are what we would expect to see in this part of the graph: they are the big budget Hollywood movies that dominate the UK box office. Note that four of the top six films are franchise movies. The red cluster is made up of 10 Hollywood films (e.g. Robin Hood, Iron Man 2, Little Fockers) that probably disappointed a little; British audiences are possibly a little tired on non-English Robin Hood’s (comedians have even stopped making jokes about the fact that he is never English) and they don’t appear to be over-enthusiastic about the Iron Man films. The character of Iron Man doesn’t have the same resonance with non-comic book readers as a Spiderman, Superman, or Batman, and so the premium derived from the prior source material is not as evident. It will therefore be interesting to see what happens to Green Lantern when it opens here on 17 June 2011, as this also does not have any major resonance for UK audiences – the best the producers may be able to expect is a red cluster rather than a black cluster film. The green group is also composed entirely of Hollywood films, with no UK films (other than those produced with US studios) making it into the top 40. This suggests that 2010 was a bad year for British cinema (if we don’t include Hollywood blockbusters as British). In fact, the green group is largely made up of Hollywood stinkers: Knight & Day, The A-Team, Tron Legacy, and The Expendables. The blue group contains 58 films, none of which grossed over $9.3 million ($6 million), and is the usual mixture of British films that made it into the Top 100 (Made In Dagenham, Tamara Drewe) and Hollywood films that performed very poorly (The Book of Eli, The Blind Side, The Last Airbender). The Book of Eli performed poorly in all three countries: it was the 64th highest grossing film in the UK, but only achieved a rank of 80 in Germany and 84 in France.

Figure 1 Top 100 films at the UK box office in 2010

The mean gross values for the different UK clusters in US dollars and pounds is presented in Table 1. Note also that dividing the opening weekend gross of a cluster by the cluster above it (e.g. purple/black) is approximately 0.5. This is also true for the total grosses, except when dividing the total gross for the blue cluster by the green cluster, which produces a ratio of 0.4.

Table 1 Cluster size, and mean total and opening weekend grosses for the top 100 films at the UK box office in 2010

Turning to the data for Germany (Figure 2) and France (Figure 3), we see that the same clear pattern evident in the UK is not present. The clustering is fair less satisfactory (I have not altered the clustering produced by the software in the graphs used here). In part, this is because I am using the same approach of clustering into 5 groups that I used for the UK, and there is no reason to think that the clustering in on country should apply in another – in fact it’s fairly obvious from looking at Figures 1 and 3, that if we are going to use 5 clusters for the UK box office data we would be better off using four (or even three) for the top 100 films in France. Germany is probably OK with 5 clusters, but I think that the clustering results presented here could be improved by reclustering the data from the black and red groups to give a better breakdown. That said, it is nonetheless instructive to see how these two countries differ from the UK by using the method in all cases.

In Germany, Harry Potter and the Deathly Hallows (Part One) clearly outperformed every other film by some distance, but the differences between the other clusters are not so clearly marked as they are in the UK.The black cluster looks like it could be broken into two groups, with the 7 highest grossing films forming a single group while the remainder look as though they belong with the red cluster. The 7 highest grossing films in the black group all grossed ore than $24 million, while the remainder grossed between $18 and $13 million. These 7 films include franchise movies like Shrek Forever After and The Twilight Saga: Eclipse, along with blockbusters like Alice in Wonderland and Inception – but NOT Toy Story 3. The other 14 black films include big Hollywood films like Clash of the Titans, Sherlock Holmes, and Robin Hood; but also, and unlike in the UK and France where their performance was poor, Resident Evil: Afterlife and The Last Airbender. Included in the black group is Konferenz der Tiere, which at 20, is the highest ranked German film – its animated film released in English as Animals United. The red cluster is made up of the same type of films as the lower 14 black films – the type of Hollywood films that dominate the box office charts of Europe (Iron Man 2, Knight & Day, The Expendables). German film titles start to make more frequent appearances once we get to the green group (e.g Vincent will Meer, Zeiten ändern Dich, Groupies bleiben nicht zum Frühstück), and there are also some big Hollywood films that have badly underperformed (The A-Team).

In France, the data shows less variation in both the total and opening weekend grosses than the other countries. The purple cluster contains a more films (8) than in any of the other countries or years looked at in this or the other posts. Six of these films are the same top 6 we saw in the UK, along with Les petits mouchoirs and L’arnacoeur. The red group looks at little lost, and could perhaps be included with the black cluster. Included in this group are films such as Iron Man 2, Knight & Day, Clash of the Titans, Sherlock Holmes, Robin Hood, and other Hollywood films that appear to have opened reasonably well, but which have perhaps underperformed in terms of their overall box office gross – hence the separation from the black cluster. The difference between the green and blue clusters in France is not clear-cut, and could realistically be placed within a single group. These groups contain a mixture of yet again failing Hollywood films (The A-Team, Knight & Day) and French films that become increasingly more frequent once we get to these last two groups.

Figure 2 Top 100 films at the German box office in 2010

Figure 3 Top 100 films at the French box office in 2010

It is interesting to compare different European countries in this way because you can see where the variations in audience taste lie: Germans were apparently eager to watch the latest Resident Evil film, whereas the French and the British were not. There were less inclined to go and see Toy Story 3, unlike the French who enjoyed the film in large numbers and the British who made this film the highest grossing film of the year by some way.

You can also find the similarities: for example, everybody hated Letters to Juliet – it ranked 94th in Germany, 100th in the UK, and still hasn’t been released in France.

Local and global in the film industry

This week some papers on the relationship between different national film industries and between different scales of the film industry within the same country. These papers emphasise cinemas that we get to hear about only infrequently in the UK (and very likely elsewhere).

As ever, the version of the paper linked to may not necessarily be the final version.

Barnard H and Tuomi K 2008 How Demand Sophistication (De-)limits Economic Upgrading: Comparing the Film Industries of South Africa and Nigeria (Nollywood), Industry and Innovation 15 (6): 647-668.

More sophisticated demand is typically seen as an enabler of economic upgrading. This study questions this linearity and extends demand theory through a case analysis of the film industry in two developing countries. When unsophisticated local demand results in well-matched supply- and demand-side elements, benefits do accrue. Low exposure to technically superior products in Nigeria allowed a fully fledged film value chain to develop, as consumers were willing to support lower quality output. Although the industry is too weak to seriously threaten incumbents from the developed world on the global stage, it has substantial impact in its home country. In contrast, if demand is far more sophisticated than supply, local industry will struggle to respond to broad-based demand signals and will achieve accelerated learning only in niche areas. South Africa has become a niche producer in the global film industry rather than film producer in its own right partly because the widespread demand for Hollywood-quality products could not be met by local supply capabilities.

Durmaz, B, Yigitcanlar T and V K 2008 Creative cities and the film industry: Antalya’s transition to a Eurasian film centre, The Open Urban Studies Journal 1: 1-10.

In the knowledge era, cites are competing to attract and retain creative industries and workers for securing their economic, social and urban growth as well as ensuring their creative city formation. During the last decade rapidly growing popularity of creative cities has encouraged many cities seeking creativity to specialise in specific sectors of the creative industries. In this context, the paper explores creativity strategies and the role of film industry in creative city formulation. Antalya, Turkey is investigated as an emerging film industry-oriented creative city due to recent industry developments, its natural and constructed assets and amenities along with its openness to creativity. This paper also examines some of the creative city examples, scrutinises potentials and constraints of Antalya and Turkish film industry, and provides discussion and recommendation for Antalya’s transition to a Eurasian film centre.

Edwards JR 2008 Building a Self-Sustaining, Indigenous Film Industry in Kenya, World Story Organization.

In August of 2008, the World Story Organization (WSO) met with the Kenya Film Commission to discuss the current state of the Kenyan film industry, specifically regarding local productions indigenous to Kenya (as opposed to external production companies that use Kenya

as a backdrop and setting). WSO, founded in April of 2008 as a non-profit organization, seeks to provide filmmaking and storytelling education for developing film industries around the world.

As part of its partnership with the Kenya Film Commission, WSO plans to deliver screenwriting and production workshops in Nairobi, Kenya in 2009. The hope is that these pilot courses will lay the foundation for a School of Excellence in Film Production in Kenya. This school would offer a one-year program in film production for Kenyans, by Kenyans. Currently no such film school program exists in all of East Africa.

The challenges that face building a self-sustaining, indigenous film industry in Kenya are varied and numerous. The purpose of this study is to address these challenges and define the role that the World Story Organization hopes to fill in accomplishing this goal.

Garcia, Jr. L and Masigan C 2001 An In-depth Study of the Film in the Phillipines.

The paper aims to define the industry and its structure, examine the laws that hinder or facilitate its growth as well as the existing associations and what they have done; look into the market potential of the film industry and its foreign market demand; examine supply capability; identify opportunities and threats confronting the industry; prepare an action plan to enhance competitiveness; and recommend a performance monitoring scheme.

Harabi N 2009 Creative industries: case studies from Arab countries, Learning Event on Developing Knowledge Economy Strategies to Improve Competitiveness in the MENA Region by the World Bank Institute, 17-21 May 2009, Alexandria Egypt.

The paper describes and explains empirically the economic performance of four key creative industries (the book publishing, music sound recording, film production and software industries) in five Arab countries (Morocco, Tunisia, Egypt, Jordan and Lebanon). Using the Porter (Diamond) model as its theoretical background, a survey was conducted in the years 2002-03 among 242 experts, covering firm representatives, industry and government experts. The results were incorporated into five national case studies. This paper synthesizes the results of those national reports, giving a comparative account of the performance of the four creative industries in these Arab countries. The overall results of the study suggest that creative industries in Arab countries are substantially underdeveloped, and there remains a great potential that should systematically be mobilized. A discussion of how this can be achieved is offered, based upon a well-designed and implemented process of upgrading and innovation in companies, industries and clusters related to creative activities. Public policy can play in this process an important role, as shown in the example of promoting Shanghai creative industries, where the Municipal Government has played a key role.

Nogueira JC 2009 Film and Video Festivals in South America: A Contemporary Analysis of Flourishing Cultural Phenomena. Unpublished MA Thesis, Ohio University.

This research mapped 175 audiovisual festivals that took place in South America in 2008 and analyzed them regarding the types of events they are, the place and time of the year they take place, what kind of films/videos they exhibit and the number of years that they have been happening. The research also compared the data with the population of each country, their GDP and number of internet users. The research also performed case studies of successful events and events that have been discontinued and compared their analysis in order to identify reasons and elements that can turn an audiovisual festival into a success or a failure.

Rosnan H and Ismail MN 2010 The impact of cultural industries on national economies, Business Management Quarterly Review 1 (2): 33-42.

The main objective of this paper is to examine the impact of cultural industries in general and film industry in particular on national economy. Globally, cultural industries have contributed to economic development of many developed and developing countries. For example, in the United States, film industry (which fall under the category of cultural industries) contribution is greater than its aerospace industry. In the case of third world countries, film industry has been neglected in the academic literature despite its huge potential contribution to the economy. Based on the reviews of earlier studies, it was found that little attention has been given by scholars to study the impact of cultural industries and national economic development. Most studies on economic development focused on other industries deemed significant, especially manufacturing industry. Hence, this paper highlights the importance of cultural industries and its potential contribution to national economy. It also highlights some important points that need to be considered by national government in their effort to benefit from the development of their national film industry.

Wong C, Kim J-B, and Matthews JH 2010 Managing creativity and its paradoxes in the film industry, INBAM Conference: Creativity and Innovation in an International Context, 1-4 June 2010, Valencia, Spain.

Purpose: The purpose of this paper is to illustrate the various types of paradoxes underlying the nature of creativity, which in turn affect the foundations of organizations and organization change in the 21st century. The film industry best illustrate the interaction of such paradoxes, creativity and organizational change. This paper examines how small and medium-sized firms in the emerging Singapore film industry stay competitive by managing or not managing these paradoxes.

Design/methodology/approach: The study reported in this paper explores the opinions, attitudes and experiences of key decision-makers in the Singaporean film industry.

Findings: This paper introduces the idea that an analysis of the various paradoxes driven by creativity in today’s society provides hints on a deeper understanding of organizational change and development in the 21″ century.

Practical implications: The findings indicate that managers need practical tools that will enable them to comprehend and better manage these emerging contradictions and fully understand the implications of paradoxical situations and organizational change.

Research limitations: The distinctive nature of the Singaporean firms means that certain factors examined may be more or less significant in the film industry in other countries.

Originality/value: The value of this paper lies in the knowledge that paradox considerations are becoming significant in understanding pluralism and the processes of organizational change.

Box office gross and the best picture

The King’s Speech won the Best Picture Oscar on Sunday, and has so grossed over $245 million worldwide against a budget of $15 million. This film follows in the footsteps of The Hurt Locker, Slumdog Millionaire, and No Country for Old Men in being voted Best Picture despite being anything but the blockbuster-type films that Hollywood is so economicelly dependent upon. (We might also like to take a moment to reflect on why it is that Americans are so keen to lavish awards on films about the British royal family). This can be clearly seen by looking that daily box office gross for the American release of The King’s Speech, using data from Box Office Mojo (Figure 1).

Figure 1 Daily box office gross for The King’s Speech, released Friday 26 November 2010 (Source: Box Office Mojo).

The blue line indicates the announcement that the film was nominated for the Academy Award for Best Picture, and the green line indicates the day on which it won the Oscar. This allows us to see the performance of the film pre- and post-nomination, and post-award. The red curve is the moving average fitted using the classical decomposition module at wessa.net, with the seasonality set to 7 to take into account the weekly variation. Unless otherwise noted, this is also the case for the other graphs included in today’s post. (NB: These graphs are quite large and contain a lot of information, so it’s best to click on then to open a separate window to see them clearly).

Looking at the data in Figure 1, we can see that the initial release of The King’s Speech was limited: its opening weekend saw it gross just $355,450 from 4 theatres. After a month, the film was released wide to 700 theatres grossing $4,484,352 for the weekend from 25 December 2010 (which was actually a Saturday). The subsequent gross of the film coincided with wins at the Golden Globes and BAFTAs (though the impact of the latter on American audiences is questionable), and the trendline reveals steady progress for the 60 days following christmas. Rather usefully, Box Office Mojo gives a breakdown for the performance of films at the US box office before and after Oscar nominations and awards, and this tells us that, if we take our last reading on the day of the Oscars (i.e. last Sunday), of the $114, 231,030 grossed by The King’s Speech $57,949,346 or 50.7% was grossed prior to its nomination and that $56,281,684 (49.3%) was grossed between the nomination and its win.

The limited release that we see in Figure 1 is also evident if we look at the daily grosses of the three prior Best Picture winners. Figure 2 presents the daily US grosses for The Hurt Locker, which is unique of the films included here as it is the only film to have won the Oscar having been released prior to October (this is why the blue and green lines do not appear on the graph). The data for this film on Box Office Mojo is for the original release int he summer of 2009, and upon nomination it was re-released in early 2010. Prior to its nomination, the film grossed $12,671,105 or 74.5% of its total ($17,017,811). Having been nominated, The Hurt Locker grossed a further $2,028,895 (11.9%); and then took a further $2,317,811 (13.6%) once it had been announced as a winner. Like The King’s Speech, The Hurt Locker was originally released to just 4 theatres grossing $145,352 on its opening weekend, and only adding screen after two weeks.

Figure 2 Daily box office gross for The Hurt Locker, released Friday 26 June 2009 (Source: Box Office Mojo).

Slumdog Millionaire is an example of a film that really benefitted enormously from the Academy Award nomination and win. The daily grosses for this film are presented in Figure 3, and note that unlike the other films included here the first of this film’s release is a Wednesday and NOT a Friday (which explains why the peaks of the film’s grosses are slightly off). Slumdog Millionaire was originally released to just 10 theatres grossing $360,018 before going wide a couple of weeks later (26 November 2008) to 614 theatres and grossing $4,301,870. The real picture is given by looking at the gross pre- and post-nomination, and post-award. Prior to being nominated, the film grossed $44,711799 or 31.6% of its total. Having been nominated, it grossed a further $53,642,596 (38.0%); and once it was conformed as Best Picture went on to gross another $42,965,533 (30.4%). This gives the film a total gross of $141,319,928 against a budget of $15 million. Looking at the trendline in Figure 3, the boost to gross of Slumdog Millionaire of being nominated and wining the Oscar is clear to see: the nominate puts it up another level and the win gives it a final kick before it plays out.

Figure 3 Daily box office gross for Slumdog Millionaire, released Wednesday 12 November 2008 (Source: Box Office Mojo).

Comparing the facts for The King’s Speech and Slumdog Millionaire, we can see that this year’s Best Picture winner is a carbon copy of the 2008 winner, and we might expect it perform similarly now that is is Best Picture.

The data for No Country for Old Men on Box Office Mojo is not to the same standard as that for the other films included here. All but six of the daily gross values are estimated and there are to breaks in the data. This should be borne in mind when interpreting the information from Figure 4. NOTE: The trendline in Figure 4 is simply the seven period moving average that Microsoft Excel will calculate for you, and is NOT the same as the trendlines in the other graphs (which have the seasonality removed).

Figure 4 Daily box office gross for No Country for Old Men, released Friday 9 November 2007 (Source: Box Office Mojo).

No Country for Old Men is another film released in November. It is another film that was initially given a limited release to just 28 theatres (grossing $1,226,333) before going wide after two weeks to 860 theatres (grossing $7,776,773) – hence the big jump in grosses around day 15. As we can see from Figure 4, it is another film to have benefitted from the nomination and the win, with weekend grosses picking up after each (although the weekday grosses after the nomination do not appear to have changed that much). The pre-nomination gross for this film was $48,899,543 (65.8% of $74,283,625); with a further $15,391,636 (20.7%) post-nomination and $9,992,446 (13.5%) post-award.

Taking these films together – The King’s Speech, The Hurt Locker, Slumdog Millionaire, and No Country for Old Men – we can see that the Academy Award for Best Picture over the past four years has gone to films that have had similar release patterns. In fact, we have to go back to The Departed in 2006 to find a Best Picture winner with the time series chart that is typical of Hollywood blockbusters – a big opening weekend followed by a steady decline. The daily box office figures for The Departed are presented in Figure 5.

Figure 5 Daily box office gross for The Departed, released Friday 6 October 2006 (Source: Box Office Mojo).

From Figure 5, we can see that the announcement that The Departed had been nominated for an Academy Award produced a small upsurge in box office gross, but that by the time it won the award it had played out and received no actual economic benefit from being the Best Picture. According to Box Office Mojo, from its original release date to the announcement of its nominations, The Departed grossed $121,756,022 or 92.0% of its total. After the nomination it grossed $10.049,275 (7.6%), and after its win just $579,018 (0.4%). (Of course, this data tells us nothing of the impact of the Oscars on DVD/Blu Ray/download sales). This is the only film of the past five Best Picture winners to open wide on its first weekend, grossing $26,887,467 from 3017 theatres. In fact, none of the other four films got anywhere near this number of theatres at any point in their release.

The UK Top 100, 2007 to 2009

A few months ago I looked at the clustering of UK films at the UK box office (here). This week I look at the top 100 films at the UK box office from 2007 to 2009, inclusively.

Data was taken from the UK Film Council and Box Office Mojo. The ranking of a film in the top 100 according to Box Office Mojo is determined by its total box office gross. The total box office data given by Box Office Mojo is in dollars, and this was converted into pounds by multiplying by 0.51 for 2007 and 2008 and 0.61 for 2009. These figures are, therefore, estimates and this should be kept in mind when interpreting the results. To sort the data into groups, the opening weekend gross (including previews) and the total box office data were entered into PAST (v. 2.04) and then allocated by using k-means clustering into 5 groups. I would have gone further into the data to compare films ranked lower than 100, but the UK Film Council box office archive does not have data for many of these films.

It is clear from the graphs of each year (Figures 1 to 3) that there is strong correlation between a film’s opening weekend gross and its total gross. The Spearman rank correlation between these two variables for 2007 is rs (98) = 0.8995, p = <0.001, and the mean proportion of a film’s total gross accounted for by the opening weekend is 0.2644 (95% CI: 0.2473, 0.2815). For 2008, rs (98) = 0.8642, p = <0.0001, and the mean proportion is 0.3019 (95% CI: 0.2826, 0.3212); and for 2009, rs (98) = 0.8993, p = <0.0001, and the mean proportion is 0.2808 (95% CI: 0.2633, 0.2983). Overall, there is little variation from year to year across the top 100 as a whole.

In each graph we see the same types of films in the different clusters. The purple cluster includes the top performing films in each year, and these are typically franchise movies (James Bond, Harry Potter, Spider-man, Shrek, The Simpsons, Batman, Indiana Jones, etc). Although the number 1 grossing film released in 2008 is Mamma Mia! The lack cluster are films that did not achieve such stellar results, but wich are nonetheless big budget studio fare. This cluster includes films from the Transformers, Twilight, and Iron Man franchises (which is probably a little disappointing for the producers), along with several family films (Wall-E, Monsters v. Aliens, Kung Fu Panda). The red cluster includes some films that perhaps achieved more than was expected (Atonement, St. Trinian’s, Juno, Paranormal Activity) as well some films that achieved much less than could be expected (Ocean’s Thirteen, Rocky Balboa, The Incredible Hulk, X-Men Origins: Wolverine). A small budget film in this group is performing strongly, but a big special effects movie in this group is soon going to be the end of your franchise. If your big budget effects movie ends up in the green group then the end will come very quickly, so don’t expect to see anymore Ghost Rider (2007) or GI Joe (2009) movies  in the future.The Curious Case of Benjamin Button, The Fantastic Mr. Fox, Cloudy with a Chance of Meatballs, Watchmen, and Fame (all from 2009) ended up in this group, and you would have to say that overall this represents poor performance on the part of these films. The green cluster includes many films that performed perfectly respectably (The Last King of Scotland, Notes on A Scandal), but which did make the same cross over achieved by Atonement or Juno. The blue cluster includes films that opened poorly before things went down hill. It is gratifying that this includes Rambo. It also includes Mr. Magorium’s Wonder Emporium which British audiences evidently did not want to watch, along with several poor quality horror films (Halloween, Hostel Part II, The Hills Have Eyes 2), as well as the unending cycle of awful spoof movies (Meet the Spartans, Disaster Movie, Epic Movie, Superhero Movie) that must do enough business in the US to justify the cost. Many of the other blue films are movies slightly outside the mainstream that have made it into the top 100 (This is England, Eastern Promises). Notable failures in the blue cluster include Teenage Mutant Ninja Turtles and Hannibal Rising from 2007, How to Lose Friends and Influence People and The X-Files: I Want to Believe and from 2008, and Revolutionary Road and The Men Who Stare at Goats from 2009.

We also see similar numbers of films appearing in each cluster in each year. The top 3 clusters (purple, black, and red) account for 31 films in 2007, 30 films in 2008, and 29 films in 2009. The black cluster in 2009 is larger than in the other years but this may be due to the fact that the data for this year includes Avatar, which simply trounced everything forcing other films that would have made the purple group in other years down one step.The green cluster includes 24 films in 2007, 29 films in 2008, and 31 films in 2009; while the blue cluster has 45 films in 2007, 41 films in 2008, and 40 films in 2009.

The number of films in each cluster, and the mean total and weekend gross are presented in Tables 1 to 3.

Table 1 Cluster size, and mean total and opening weekend grosses for the top 100 films at the UK box office in 2007

Table 2 Cluster size, and mean total and opening weekend grosses for the top 100 films at the UK box office in 2008

Table 3 Cluster size, and mean total and opening weekend grosses for the top 100 films at the UK box office in 2009

The outlier in the red cluster to the left of Figure 1 is PS I Love You, which was released on just 80 screens at Christmas 2007 for the first two weeks, producing a very low opening weekend, but was then released wide on 365 screens in the first week of January 2008 and immediately grossed a respectable £1.79 million for that weekend. This film probably underperformed at the box office, and if it had been released wide for its opening weekend could be expected (on the basis if its subsequent weekends) to have made closer to (if not actually into) the black cluster. I can’t imagine what advantage was gained from releasing a romatic film at Christmas on just 80 screens, especially when it is well-known that the opening of film is the most crucial period in its box office life.

Figure 1 Top 100 films at the UK box office in 2007

Although the top 3 groups (red, black, and purple) in 2008 include roughly the same number of films as the other years, it is immediately apparent from Figure 2 that films in the red group performed less well in this year. Unlike 2007 and 2009, the majority of films in this cluster achieved a total gross of less than £10 million, and from Tables 1 to 3 we can see that the mean total gross is lower for this year than in the others (ANOVA: F (2, 48) = 17.14, p = <0.0001; Tukey HSD: 2007/2008 – p = 0.0004, 2008/2009 – p = 0.0001, 2007/2009 – p =0.4363). The total box office gross for the top 100 films in 2008 was £780.7 million, the lowest of any year covered here (2007 = £868.2 million, 2009 = £1002.7 million).  The outliers in the green cluster are In Bruges, which seems to have been released twice – once in March on 75 screens and then again in April on 270 screens; and There Will Be Blood, which opened on just 24 screens but grew this to 199 screens in week 5 of its release. These are exceptions to the rule that opening weekends are destiny. In the case of In Bruges, we see a small budget film getting a second, bigger lease of life after an initial run as distributors and exhibitors respond to audiences and reviews. The release of There Will Be Blood can be explained by looking at America. In the US this film was released on just 2 screens in December 2007 before going to 1620 screens after 7 weeks by February 2008 – when it was nominated for eight (and later won two) Academy Awards – so this is perhaps the definition of an awards film. Without the Oscars, the release of this film would have been that much more limited.

Figure 2 Top 100 films at the UK box office in 2008

In 2009, there were two films that grossed considerably more than other films: Avatar and Harry Potter and the Half Blood Prince (although most of the gross for Avatar was accumulated in 2010). Avatar was released at Christmas and so its opening weekend accounts for only 9% of its total gross, whereas 38% of the gross for Harry Potter was accumulated on it opening weekend. The 2nd tier of films (the black group) exhibits much more variation for the opening weekend grosses in this year than for 2007 and 2008. There is much less separation between the red and black clusters in Figure 3, and this again may be due to the distorting effect of Avatar. Again we see some films that have very low opening weekends relative to their total gross: Gran Torino in the green cluster and Vicky Christina Barcelona in the blue cluster. AS before this can be attributed to distributors dipping their toe into the market with limited releases, before expanding the number of screens the following week. Whether or not this actually provided an advantage for these films is unknown, but a bigger opening weekend for Gran Torino would have pushed it towards the red cluster. Unlike PS I Love You, they are much harder to market to a specific audience and so perhaps the is some nervousness on the part of distributors to commit so many screens without such a defined audience. Who watches Woody Allen movies nowadays?

Figure 3 Top 100 films at the UK box office in 2009

Overall, there is remarkable stability in the top 100 films at the UK box office, which is exactly what studios pay to see. By applying clustering to box office data in this manner we can identify some of the structure in this data, and to identify those films which performed above or below expectation, and to compare the performance of similar films from year to year.

Research on film industries

THis week a collection of articles looking at film industries from perspectives that are typically different from that typically found in film studies. As usual, the version linked to may not be the final version published.

There is a lot of interesting research of film industries available through the Copenhagen Business School’s Knowledge portal (here), and by searching its research database and open archive. The CBS has a robust approach to open access and most of the research is available in English. Topics include:

• The internationalization of the Indian film industry
• City branding and film festivals
• Film labour markets
• The Danish film industry
• Globalization and the cinema

Bakker G 2004 At the Origins of Increased Productivity Growth in Services: Productivity, Social Savings and the Consumer Surplus of the Film Industry, 1900-1938, Working Paper 81, Department of Economic History, London School of Eocnomics.

This paper estimates and compares the benefits cinema technology generated to society in Britain, France and the US between 1900 and 1938. It is shown how cinema industrialised live entertainment, by standardisation, automation and making it tradable. The economic impact is measured in three ways: TFP-growth, social savings in 1938 and the consumer surplus enjoyed in 1938. Preliminary findings suggest that the entertainment industry accounted for 1.5 to 1.7 percent of national TFP-growth and for 0.9 to 1.6 percent of real GDP-growth in the three countries. Social savings were highest in the US (c. 2.5 billion dollars and three million workers) and relatively modest in Britain and France, possibly because of the relative abundance of skilled live-entertainment workers. Comparative social savings at entertainment PPP-ratios inflate British social savings to above the US level. Converging exchange rates and PPP price ratios suggest rapid international market integration. The paper’s methodology and findings may give insight in technological change in other service industries that were also industrialised.

Cazetta S 2010 Cultural clusters and the city: the example of Filmbyen in Copenhagen, ACEI 16th International Conference on Cultural Economics, 9-12 June 2010, Copenhagen, Denmark.

This paper explores the origins and development of Filmbyen (FilmCity), a media hub created around Lars von Trier‟s film company Zentropa in the outskirts of Copenhagen.

In the first part of the paper the theoretical framework is introduced, with a review of the relevant literature concerning the role of culture in urban development and with a focus on clustering in the cultural industries.

Subsequently, after analyzing what kind of impact the film industry has on local economic development, and more specifically what role it plays in urban and regional development strategies (looking at Greater Copenhagen), the case of Filmbyen is studied in detail. The location patterns of film and film-related companies based in this special district are investigated with a small-scale survey – observing in particular what are the advantages of clustering, what networks are created, what kind of urban environment comes about.

Coe NM 2000 The view from out West: embeddedness, inter-personal relations and the development of an indigenous film industry in Vancouver, Geoforum 31: 391-407.

This paper considers the development of a particular cultural industry, the indigenous film and television production sector, in a specific locality, Vancouver (British Columbia, Canada). Vancouver’s film and television industry exhibits a high level of dependency on the location shooting of US funded productions, a relatively mobile form of foreign investment capital. As such, the development of locally developed and funded projects is crucial to the long-term sustainability of the industry. The key facilitators of growth in the indigenous sector are a small group of independent producers that are attempting to develop their own projects within a whole series of constraints apparently operating at the local, national and international levels. At the international level, they are situated within a North American cultural industry where the funding, production, distribution and exhibition of projects is dominated by US multinationals. At the national level, both government funding schemes and broadcaster purchasing patterns favour the larger production companies of central Canada. At the local level, producers have to compete with the demands of US productions for crew, locations and equipment. I frame my analysis within notions of the embeddedness or embodiment of social and economic relations, and suggest that the material realities of processes operating at the three inter-linked scales, are effectively embodied in a small group of individual producers and their inter-personal networks.

Hoefert de Turégano T 2006 Public Support for the International Promotion of European Films, European Audiovisual Observatory.

Jones C 2001 Co-evolution of entrpreneurial careers, institutional rules, and competitive dymanics in American Film, 1895-1920, Organization Studies 22 (6): 911-944.

An historical case analysis of the American film industry is undertaken to gain a better understanding of the co-evolutionary processes of entrepreneurial careers, institutional rules and competitive dynamics in emerging industries. The study compares technology and content-focused periods, which were driven by entrepreneurs with different career histories and characterized by distinct institutional rules and competitive dynamics. Archival data and historical analysis is used to trace how entrepreneurial careers, firm capabilities, institutional rules, and competitive dynamics co-evolved. A co-evolutionary perspective is integrated with insights from institutional and resource-based theories to explain how the American film industry emerged, set an initial trajectory with specific institutional rules and competitive dynamics, and then changed.

Mezias Sj and Kuperman JC 2001 The community dynamics of entrepreneurship: the birth of the American film industry, 1895-1929, Journal of Business Venturing 16 (3): 209-233. [NB: this is not the full abstract, which is actually longer than some research papers].

This paper provides insight for practitioners by exploring the collective process of entrepreneurship in the context of the formation of new industries. In contrast to the popular notions of entrepreneurship, with their emphasis on individual traits, we argue that successful entrepreneurship is often not solely the result of solitary individuals acting in isolation. In many respects, entrepreneurs exist as part of larger collectives. First and foremost, there is the population of organizations engaging in activities similar to those of the entrepreneurial firm, which constitute a social system that can affect entrepreneurial success. In addition, there is also a community of populations of organizations characterized by interdependence of outcomes. Individual entrepreneurs may be more successful in the venturing process if they recognize some of the ways in which their success may depend on the actions of entrepreneurs throughout this community. Thus, we urge practitioners and theorists alike to include a community perspective in their approach to entrepreneurship. We also suggest that one way of conceptualizing the community of relevance might be in terms of populations of organizations that constitute the value chain. For example, in the early film industry a simple value chain with three functions—production, distribution, and exhibition—is a convenient heuristic for considering what populations of organizations might be relevant. As we show in our case study of that industry, a community model offers insights into the collective nature of entrepreneurship and the emergence of new industries.

Orbach BY and Einav L 2007 Uniform prices for differentiated goods: the case of the movie-theater industry, International Review of Law and Economics 27 (2): 129-153.

Since the early 1970s, movie theaters in the United States have employed a pricing model of uniform prices for differentiated goods. At any given theater, one price is charged for all movies, seven days a week, 365 days a year. This pricing model is puzzling in light of the potential profitability of prices that vary with demand characteristics. Another unique aspect of the motion-picture industry is the legal regime that imposes certain constraints on vertical arrangements between distributors and retailers (exhibitors) and attempts to facilitate competitive bidding for films. We explore the justifications for uniform pricing in the industry and show their limitations. We conclude that exhibitors could increase profits by engaging in variable pricing and that they could do so more easily if the legal constraints on vertical arrangements are lifted.

 

Gross Ratios in Sweden

The mean 3-day gross ratio can be used as a means of determining when an audience attends a film during the week: the greater value of the mean ratio, the greater the proportion of a film’s gross that was taken during the period Friday to Sunday. More details can be found in the PowerPoint presentation available here.

This week I look at the mean 3-day gross ratios of films released in Sweden between July 2008 and July 2010 (See Table 1). Data was collected from Box Office Mojo, and all calculations were performed with values in US dollars but have not been corrected for fluctuations in exchange rates. The ratios are calculated from the first 8 weeks of a film’s release (or 7 weeks in some cases), with the opening weekend gross left out to remove the impact of previews.

Table 1 Week of release and mean 3-day gross ratios for films released in Sweden from July 2008 to July 2010 (n = 50)

If we plot this information (Figure 1) we can see clear pattern emerging over time: the mean 3-day gross ratio of a film released in Sweden is lower in the spring and the summer than it is in the autumn and the winter. The median of the mean ratios for the 18 films released in weeks 1 to 17 (inclusive) is 0.5783 (95% CI: 0.5216, 0.6349); and for the 18 films released in weeks 30 to 52 (inclusive) is 0.5979 (95% CI: 0.5691, 0.6227). For the 14 films released between weeks 18 to 29 (inclusive) the median of the mean ratios is 0.4182 (95% CI: 0.3917, 0.4447).  Although there are a handful of films released during the first and last parts of the year have mean ratios below 0.5, only one film (Prince of Persia: Sands of Time) released during the summer period has a mean 3-day gross ratio greater than 0.5, and even then it is only slightly greater than this figure. The trend line in Figure 1 is a second-order polynomial (y = 0.000298966x²-0.0152441x+0.65887), and R² = 0.3445. This indicates that week of release is a factor in determining when audiences in Sweden go to the cinema, but is not the whole story.

Figure 1 Mean 3-day gross ratios plotted against week of release for films released in Sweden from July 2008 to July 2010 (n = 50)

What might explain the pattern in Figure 1? Well, the relationship to the seasons is a good indicator that leisure activities in Sweden are dependent upon the weather. Figure 2 presents the typical sunrise and sunset times for Stockholm from the Visit Sweden website (obviously, if you go further north there are some parts of the country that have no sunset or sunrise at certain times of the year).

Figure 2 Sunrise and sunset times for Stockholm.

Looking at Figures 1 and 2 together we see that as the number of daylight hours increases, the mean 3-day gross ratio of a film goes decreases; and that as the nights become longer the mean ratio increases (although there is a slight displacement due to the effect of ongoing release). It is probably not the case that it is the number of daylight hours that directly influences the mean 3-day gross ratio. Rather, it is likely that people participate in a range of leisure activities that are not accessible at certain times of the year. For example, the Swedish football season runs from March to October and thereby provides competition for the disposable income of potential cinema-goers at this time of the year. However, the Swedish ice hockey season runs from September to March and so this effect may be small. Crucially, the difference between football, the cinema, and ice hockey is that the former is played in open air stadiums whereas the latter take place indoors.

It would be interesting to compare the distribution of the mean 3-day gross ratios of films released in Norway, Finland, Denmark, and the Baltic states to see if similar patterns occur. It may be that the cinema-going habits in the most northerly parts of Europe are different to those in the most southerly.

How gross is gross?

One of the unintended consequences of the New Hollywood cinema of the late-1960s and 1970s was the domination of the industry by the opening weekend gross. Once studio executives saw how much could be taken in a single weekend by releasing films across a large number of screens the opening weekend defined the attitude of the studios to their product:  a film with a big opening weekend would receive a marketing boost – not least because it would be widely reported that it had a big opening weekend; where as a film that performed poorly over its first three days would die a quiet and unlamented death. (Cynics would at this point note that 3-days seems like a luxury in 21st century Hollywood). The opening weekend gross became an indicator of the likely success of a movie, and has been analysed by economists. For example, Jeffrey S. Simonoff and Ilana R. Sparrow concluded that

the ultimate box office performance of movies can be forecast with some accuracy given easily available information. The predictions are especially accurate after the first weekend of release for movies opening on more than 10 screens, although the tendency for some distributors to slowly widen release of a film based on word of mouth complicates matters. Oscar nominations in the major categories do seem to provide a boost to revenues, as long as the movie has not already been in release for many months when the nominations are announced.

[Simonoff JS and Sparrow IR 2000 Predicting movie grosses: winners and losers, blockbusters and sleepers, Chance 13 (3): 15-24. The article can be accessed here].

That the opening weekend gross should have such a large role in determining the total gross of a film is unsurprising: after all, for most films the opening weekend is the point of widest release and over time the number of screens on which a film plays declines week by week. Occasionally there are sleepers which buck the trend; but overall it is pretty unremarkable that an industry geared towards the opening weekend should find itself dominated by the opening weekend.

This is interesting stuff, but it all relates to Hollywood films in an American context. There is very little by way of similar research on British cinema and so here I plot the relationship between the opening weekend gross (including previews) and the total gross after 8 weeks on release for films defined (in some way) as ‘British’ released in the UK in 2007 and 2008. The data was collected for 50 films from the UK Film Council.

Although 8 weeks does not seem very long, this is roughly about the length of time a film lasts at the UK box office. (It is also often difficult to find good quality data for anything after week 8, especially for non-British films at the UK box office). There are some films that continue to earn substantial amounts of money after 8 weeks (e.g. Mamma Mia!) but this does not happen often. The relevant information is presented in Tables 1 and 2, and is represented in Figure 1. The column P in Tables 1 and 2 is the proportion of week 8 total gross accounted for by the opening weekend. The data is organised into subgroups of low-grossing and high-grossing films that are colour-coded for easier reference.

Figure 1 Opening weekend gross (including previews) and week 8 total gross for ‘British’ films released in the UK, 2007 and 2008

Table 1 Opening weekend gross (including previews) and week 8 total gross for ‘British’ films released in the UK, 2007 and 2008 (Low grossing films)

Table 2 Opening weekend gross (including previews) and week 8 total gross for ‘British’ films released in the UK, 2007 and 2008 (High grossing films)

There is clearly a strong linear trend in the relationship between the opening weekend gross and the total gross after 8 weeks, and Spearman’s r (48) = 0.9763, p = <0.0001. Therefore, we can conclude that the opening weekend gross is a good predictor of the total gross of a film after 8 weeks on release. Like I said, this is not that surprising. It is, however, interesting to look at the grouping of films in Figure 1 to identify how different sections of the exhibition market relate to one another.

The 50 films looked at here can be sorted into four sub-groups. In Table 1, we find the low grossing films that are overwhelming those films that tend to be what people think of as ‘British national cinema’ – they have British subjects, British production companies, British stars, etc. The blue films have low opening weekends (median  = £0.58 million) and low total grosses after week 8 (median = £3.27 million). No film in this group grossed more than £10 million after 8 weeks. There are some films in this group with some Hollywood involvement but this did not have the same effect as the co-mingling of British source material and Hollywood blockbuster style as it does for the Harry Potter movies. How to Lose Friends and Alienate People, for example, originated in the UK with Toby Young’s memoir and featured Jeff Bridges and Kirsten Dunst, but performed as badly in the UK as it did everywhere else.

The green films perform better in either or both the opening weekend gross (median = £2.36 million) and total gross (median  = £10.91 million) categories, but necessarily by a large amount. Atonement, for example, has an opening weekend similar to those at the upper-end of the blue films, but grossed much more than these films did in general, and so it performed much more strongly than many other British films after its opening weekend. The same is true of St. Trinian’s. The remainder of the green films are underperforming Hollywood backed films (although Step Up 2 could probably be considered reasonably successful). Chronicles of Narnia: Prince Caspian did not do well at all, and its box office performance is a long way behind the blockbusters in the red and purple groups. This film is a long way behind Harry Potter and the Order of the Phoenix, and it is no surprise Disney bailed out of the series and left production to Walden Media.

The red films show another step up in terms of the opening weekend (median = £6.55 million) and week 8 gross (median = £23.43 million); and represent moderately successful blockbusters, but which are nonetheless strictly second tier. The stand out film here is Mamma Mia!, which bucks the trend for this data to take the highest gross from a relatively poor opening weekend. Finally, in the purple films we have the top earners – every film in this small group has an opening weekend over £10 million (median = £13.81 million) and grossed at least £39 million after 8 weeks (median  = £48.07 million).

It is also clear that the proportion of the week 8 total gross accounted for by the opening weekend is lower for low-grossing films (median = 0.2208 [95% CI: 0.1941, 0.2474]) than it is for high grossing films (median = 0.2957 [95% CI: 0.2749, 0.3165]). This may be due to the fact that the higher grossing movies are blockbusters and received much wider releases than small British films such as The Flying Scotsman or Grow Your Own. Of the higher grossing films, only Mamma Mia! stands out as a film with a low value of P and a high gross, and this films was the highest earner at the UK box office until Avatar.

Death of the UKFC

The decision to dispose of the UK Film Council (UKFC) has been announced by the government this week, and has produced a great deal of gnashing and wailing (and some celebrating). Overall, there has disappointment at the decision – largely because it came of out of the blue, apparently with no consultation of the industry or the public. Perhaps most seriously, there does not appear to be an alternative in place before the announcement. This will create uncertainty in the film industry, leading to a drop in investment in production simply because producers will not be able to make decisions for the next couple of years.

The demise of the UKFC has been widely reported as a disaster – in the Guardian, Sunday Times, Herald Scotland, and The Scotsman – or a good thing – in The Daily Telegrpah (which has nothing to do with film policy and was always predictable) and yesterday in The Times; but the fact is that an industry that has perennially struggled to make an impact has lost its most public voice with no incoming body to take its place.

We may find ourselves back in the dark days of the 1980s when we had a Conservative government that simply was not interested in the film industry and what it could do, and which lead to a directionless and fairly dismal period in the history of British cinema.

This is a very shortsighted and ill-informed decision by the government.

But that does not make it wrong, per se.

The first thing we might wish to know is why does an industry that has a turnover of millions of pounds need a tax-payer funded body to lobby for it.

If anything, the existence of the UKFC pointed to the fundamental weakness in the British film industry – namely, that it just cannot get its act together. The demise of the UKFC might be a good thing if it prompts BAFTA, the Film Distributors Association, the Cinema Exhibitors Assocaition, PACT, Skillset, BECTU and the other unions, the regional screen agencies, and the thousands of production, distribution, and exhibition companies in the UK to work together to create a single body to promote the film industry. It would be a good thing – but of course it will never happen. Why? because there is a malaise about the film industry in the UK where very little seems possible simply because nobody can be really bothered. Will we get an industry body to promote and protect its interests? No – because everybody will the pass the buck until at some later date the government will step in. This will obviously be hailed as just what is needed to get the industry going, rather than be understood as evidence that – yet again – the industry fails to organise itself.

The British film industry needed – and needs – a body like the UK Film Council. But the fact that this body only came into existence with the support of the government is proof of the desperate state of the industry.

Consider the example of the role of the Research and Statistics Unit (RSU) at the UK Film Council.

As a consumer of the outputs of the RSU this is obviously of interest to this blog, and without the UKFC in place to disseminate information about the film industry some of the topics covered would be very difficult to do otherwise.

Nonetheless, I am not particularly a big fan of the RSU because it seemed so limited its actions. As far as I could tell, it took information produced by other bodies and produced some nice-looking graphs based on this data. Often, it took a considerable amount of time to do this – why did it take until Wednesday (at the earliest) to get the weekend box office data on-line? Despite the grand title of ‘Research and Statistics Unit,’ I am not aware of any actual research conducted by the RSU. The RSU did not do much in the way of analysis – the Statistical Yearbooks, for example, present a great deal of information but you could not say that it analysed this data to arrive at any conclusions about the economics of the British film industry.

Do not get me wrong – collecting, collating, and disseminating were (and are) important functions, and the RSU was an improvement on what had gone before. The Statistical Yearbooks are much better than the old BFI Film and Television Handbooks. But it all seems to lack ambition.

We have to ask some important questions about the future of the RSU:

1. What will happen to the outputs of the RSU that are currently available?

The RSU website provides a range of information from box office grosses, to the Statistical Yearbooks, to production data, and so on. Going back to the summer of 2001, we can find much information that could be used far better by film scholars but which may soon disappear. What provision has the government made to ensure that this data remains available after the UKFC has been shut down? Perhaps this information could be transferred to the BFI’s website where it can be made freely available. (This is after all public data). When the Thatcher government (rightly) disposed of the Eady Levy they simply stopped collecting any data on the film industry, so that we have gaps in the data from May 1985 to December 1986. This cannot be allowed to happen again or we will lose a whole decade from the historical record.

This does, of course, raise issues about the purpose of archives in a digital age. I have worries that editions of the Statistical Yearbook will continue to be available in the British Library, the Library of the House of Commons, the DCMS (and its successors), and maybe even university libraries. But what about the production data posted on the RSU website? Or the box office data? Who will archive this information?

2. Who will take over from the UK Film Council in collecting and disseminating information on the British film industry?

One solution that I am sure many will propose is the BFI, which has performed a similar role in the past. However, I think this is a poor solution to the problem for three reasons: (1) the BFI did not necessarily do a good job on gathering and disseminating industry data in the past, and the RSU improved on it here; (2) the BFI is not an institution geared towards the industry – its focus is educational and should remain so; and, (3) the film industry, as noted above, is perfectly capable of collecting and distrbuting data itself and should not be taxpayer-funded.

Above I suggested that the BFI host the box-office data currently availble from the UKFC and I think this is broadly compatible with its educational mission – that by preserving this information it is fulfilling one of its key educational functions.

The obvious answer is for an industry directed body to gather and make available data on the UK film industry. Indeed, the industry cannot afford to not do this – making a case to government for continuing tax-relief and/or subsidies will require detailed argument that can empirically justify these policies.

But it is precisely here that the industry falls down. I have complained elsewhere on this blog about the standard of statistical information at the websites of the Film Distributors Association  (FDA – here) and the Cinema Exhibitors Association (CEA – here). These are supposedly major industry organisations that have a specific role in promoting cinema-going in the UK, but the so-called ‘data banks’ of both are pathetic. There is very little usable information and it lacks any depth. The availability of historical data is particularly poor – in some cases going back only as far as 2004. The choice of data is esoteric – the FDA website lists the top 6 films on UK television in 2008, but does not give any data for any other years and why only the top 6? Much of what is available is out of date – the FDA will tell you about cinema-going in Europe in 2006, but nothing else. If you want to see just how pathetic this data is then look here.

The CEA website is generally better than that of the FDA, and is broadly speaking much more up-to-date, but if you want to know about the box office performance of films then it is worse than the RSU. Latest weekend box office figures are only available for the top 15 films. Why only the top 15? Even the RSU made available data for British films on release outside the top 15 and other openers. Why can we not have a complete list of the box office data for every film on general release in the UK? Why can we not have much more varied and detailed data? Why can we not have the daily box office data?

Why has the film industry failed to produce high quality and reliable information? The answer is simple – the RSU took on that role for it so no one had to try. Here the existence of the UK Film Council clearly had a negative impact on the industry.

Of course, an objection to be raised here is that it is expensive to collect and disseminate industry information. And, dear god, is it expensive – the latest report on cinema-going in the UK and Ireland published by Dodona Research in April 2010 will cost you £775. (See here for Dodona’s website). An annual subscription to Screen Digest is £575 (+VAT). (Do not even consider buying any of Screen Digest’s research reports if you don’t have a very large overdraft facility).

If we left it up to the industry then would we not be left in the situation where the valuable data collected remains behind a paywall where no one can get at it? Would this not impoverish our knowledge to the extent that we might as well not bother studying the film industry of the UK -  we cannot afford the data even if it exists, so why try?

The answer to this objection is to look here at the website of Box Office Mojo (which is owned by the Internet Movie Database) . This website makes detailed analysis of the American film industry available for free. There is a range of data available and there is great depth to the data. There is analysis, and the data is broken down into useful categories (genres, stars, franchises, etc). There is great historical coverage. The vast majority of this data is not behind a paywall, though if you do register you get access to many useful features and it will only cost you only $89 per year.

Why do we not have something similar in the UK?

Partly because the RSU usurped the industry in fulfilling this role – why would you set up a website like Box Office Mojo funded by advertisers and subscribers, if the government will do it anyway?

But a major part is also the attitude of the British to information. In the UK, information must be controlled; and it has been paid for, then information is treated in a  very proprietory manner. In contrast, Americans take a much more militant attitude to free speech and are very firmly of the opinion that information should be in the public realm.

With the demise of the UK Film Council and the RSU, we may see the industry improve its performance in this area as no one is there to do the work for it. It is even possible that a private company  – like Box Office Mojo – steps into to fulfil this role now that it could make a profit in the absence of the RSU. The problem of the public availability of this information will not be solved until there is a fundamental change in the attitude of the industry in the UK to how it goes about doing this.

The first of these changes is possible but unlikely. The second will take a miracle.