Blogs, Advertising and Local-Market Movie Box-Office Performance

Abstract:     
We measure the effects of pre- and post-release blog volume, blog valence and advertising on the performance of 75 movies in 208 geographic markets of the U.S. We attribute the variation in blog effects across markets to differences in demographic characteristics of markets combined with differences across demographic groups in their access and exposure to blogs as well as their responsiveness conditional on access. We study the effects of pre-release factors on opening day box-office performance and of pre- and post-release factors on box-office performance one month after release. Our estimation accounts for confounding factors in the measurement of these effects via the use of instrumental variables. We find considerable heterogeneity in the effects across consumer and firm generated media and across geographic markets, with gender, income, race and age driving across-market differences. Release day performance is impacted most by pre-release blog volume and advertising, whereas post-release performance is influenced by post-release blog valence and advertising. Across markets, there is more variance in advertising and blog valence (post-release) elasticities than there is in blog volume (pre-release) elasticities. We identify the top 20 markets in terms of their elasticities to each of these 3 instruments. Further, we classify markets in terms of their sensitivities across these 3 instruments to identify the most sensitive markets that studios can target with their limited release strategies. Finally, we characterize the extent to which studios could have improved their limited release strategies by identifying the overlap between the actual release markets and the most responsive ones. At the time of first release, we find that studios cover only 53% of the most responsive advertising markets and 44% of the most responsive markets to pre-release blog volume in their limited release strategies, implying considerable room for improvement if these were the only metrics to assess those strategies.

Number of Pages in PDF File: 35

Keywords: consumer generated media, social media, online word of mouth, blogs, advertising, motion pictures, endogeneity, instrumental variables

working papers series