Word-of-Mouth for Movies: Its Dynamics and Impact on Box Office Revenue

Abstract

This paper uses actual WOM information to examine the dynamic patterns of WOM and how it helps explain box office revenue. The WOM data was collected from the website of Yahoo! Movies. The results show that WOM activities are the most active during pre-release and the opening week, and that movie audiences tend to hold relatively high expectation before release, but become more critical in the opening week. More importantly, WOM information offers significant explanatory power for both aggregate and weekly box office revenue, especially in the early weeks after opening. However, most of this explanatory power comes from the volume of WOM, not its valence as measured by the percentages of positive and negative messages.

Keywords: Word-of-mouth, Consumer-generated content, Movie, Forecasting, Consumer reviews, Online product reviews