Abstract

http://ssrn.com/abstract=1331124
 
 

References (24)



 
 

Citations (15)



 


 



The Effects of Online User Reviews on Movie Box-Office Performance: Accounting for Sequential Rollout and Aggregation Across Local Markets


Pradeep K. Chintagunta


University of Chicago

Shyam Gopinath


University of Utah - David Eccles School of Business

Sriram Venkataraman


University of North Carolina Kenan-Flagler Business School

February 10, 2010

Chicago Booth School of Business Research Paper No. 09-09

Abstract:     
Our objective in this paper is to measure the impact of national online user reviews (valence, volume and variance) on Designated Market Area (DMA) level local geographic box-office performance of movies. We account for three complications with analyses that use national level aggregate box-office data – (i) aggregation across heterogeneous markets (“spatial aggregation”); (ii) serial correlation due to sequential release of movies (“endogenous rollout”); and (iii) serial correlation due to other unobserved components that could affect inferences regarding the impact of user reviews. We use daily box-office ticket sales data for 148 movies released in the U.S. during a 16-month period (out of the 874 movies released) along with user review data from the Yahoo! Movies website. The analysis also controls for other possible box-office drivers. Our identification strategy rests on our ability to identify plausible instruments for user ratings by exploiting the sequential release of movies across markets – since user reviews can only come from markets where the movie has previously been released in, exogenous variables from previous markets would be appropriate instruments in subsequent markets.

In contrast with previous studies that have found that the main driver of box-office performance is the volume of reviews, we find that it is the valence that seems to matter and not the volume. Further, ignoring the endogenous rollout decision does not seem to have a big impact on the results from our DMA-level analysis. When we carry out our analysis with aggregated national data, we obtain the same results as those from previous studies, i.e., that volume matters but not the valence. Using various market level controls in the national data model, we attempt to identify the source of this difference.

By conducting our empirical analysis at the DMA level and accounting for pre-release advertising, we are able to classify DMA’s based on their responsiveness to firm initiated marketing effort (advertising) and consumer generated marketing (online word-of-mouth). A unique feature of our study is that it allows marketing managers to assess a DMA’s responsiveness along these two dimensions. The substantive insights can help studios and distributors evaluate their future product rollout strategies. While our empirical analysis is conducted using motion picture industry data, our approach to addressing the endogeneity of reviews is generalizable to other industry settings where products are sequentially rolled out.

Number of Pages in PDF File: 34

Keywords: Online Word of Mouth, Sequential New Product Release, Endogeneity, Instrumental Variables, Generalized Method of Moments, Motion Pictures

working papers series


Download This Paper

Date posted: January 23, 2009 ; Last revised: March 1, 2010

Suggested Citation

Chintagunta, Pradeep K. and Gopinath, Shyam and Venkataraman, Sriram, The Effects of Online User Reviews on Movie Box-Office Performance: Accounting for Sequential Rollout and Aggregation Across Local Markets (February 10, 2010). Chicago Booth School of Business Research Paper No. 09-09. Available at SSRN: http://ssrn.com/abstract=1331124 or http://dx.doi.org/10.2139/ssrn.1331124

Contact Information

Pradeep K. Chintagunta
University of Chicago ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-8015 (Phone)
773-702-0458 (Fax)
Shyam Gopinath (Contact Author)
University of Utah - David Eccles School of Business ( email )
1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States
Sriram Venkataraman
University of North Carolina Kenan-Flagler Business School ( email )
Chapel Hill, NC 27599
United States
Feedback to SSRN


Paper statistics
Abstract Views: 2,747
Downloads: 673
Download Rank: 19,332
References:  24
Citations:  15
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.469 seconds