Abstract
One of the factors that has emerged as consistently related to the box office success of movies is the size of their budget. Regardless of the impact of other variables, when studios spend more money on movies, they generally get bigger returns. This predictor of movie success at the box office is not perfect, however. There have been big-budget movies that have flopped. Likewise, there have been small-budget movies that have generated huge profits. The dynamics of the budget size effects are examined along with exceptions and what might be learned from them.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Basuroy, S., & Chatterjee, S. (2008). Fast and frequent: Investigating box office revenues of motion picture sequels. Journal of Business Research, 61, 798–803.
Cabral, L., & Natividad, G. (2016). Box-office demand: The importance of being ~1. Journal of Industrial Economics, 64(2), 277–294.
Caves, R. E. (2001). Creative industries: Contracts between art and commerce. Cambridge, MA: Harvard University Press.
Delen, D., & Sharda, R. (2010). Predicting the financial success of Hollywood movies using an information fusion approach. Industrial Engineering Journal, 21(1), 30–37.
Duan, W., Gu, B., & Whinston, A. (2008a). Do online reviews matter? An empirical investigation of panel data. Decision Support Systems, 45, 1007–1016.
Duan, W., Gu, B., & Whinston, A. (2008b). The dynamics of online word-of-moth and product sales—An empirical investigation of the movie industry. Journal of Retailing, 84(2), 233–242.
Einav, L. (2010). Not all rivals look alike: Estimating an equilibrium model of release date timing game. Economic Inquiry, 48(2), 369–390.
Elberse, A. (2007). The power of stars: Do star actors drive the success of movies? Journal of Marketing, 71, 102–120.
Elberse, A., & Anand, B. (2007). The effectiveness of pre-release advertising for motion pictures: An empirical investigation using a simulated market. Information Economics and Policy, 19, 319–343.
Eller, C. (2017). The costliest box office flops of all time. Los Angeles Times. Available at: http://www.latimes.com/entertainment/envelope/cotown/la-et-box-office-flops-pictures-photogallery.html
Frankel, D. (2009, October 28). ‘Paranorml’ now the most profitable film ever. The Wrap. Available at: http://www.thewrap.com/paranormal-now-most-profitable-film-ever-9335/. Accessed 2nd September 2016.
Fritz, B. (2009, October 25). Paramount may produce “Paranormal Activity” sequel. Los Angeles Times. Available at: http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/10/paramount-paranormal-activity-sequel.html. Accessed 2nd September 2016.
Ghiassi, M., Li, D., & Moon, B. (2015). Pre-production forecasting of movie revenues with a dynamic artificial neural network. Experts Systems and Applications, 42(6), 3176–3193.
IMDb. (n.d.). Paranormal Activity (2007). Available at: http://www.imdb.com/title/tt1179904/. Accessed 2nd September 2016.
Joshi, M., Das, D., Gimpel, K., & Smith, N. (2010). Movie reviews and revenues: An experiment in text regression. In Proceedings of the 2010 Annual Conference of the North American Chapter of the Association of Computational Linguistics (pp. 293–296). Los Angeles, CA: Association for Computational Linguistics.
Litman, B. R. (1983). Predicting success of theatrical movies: An empirical study. Journal of Popular Culture, 16(4), 159–175.
Litman, B. R., & Ahn, H. (1998). Predicting financial success of motion pictures. In B. Litman (Ed.), The motion picture mega-industry. Boston, MA: Allyn and Bacon.
Litman, B. R., & Kohl, L. S. (1989). Predicting financial success of motion pictures: The ‘80s experience. Journal of Media Economics, 2, 35–50.
McKenzie, J. (2013). Predicting box office with and without markets: Do internet users know anything? Information Economics and Policy, 25, 70–80.
MIT Technology Review. (2015, June 22). Data mining reveals the surprising factors behind successful movies. Available at: https://www.technologyreview.com/s/538701/data-mining-reveals-the-surprising-factors-behind-successful-movies. Accessed 15th August 2015.
Moretti, E. (2011). Social learning and peer effects in consumption: Evidence from movie sales. Review of Economic Studies, 78(1), 356–393.
Morris, B. (2012, May 8). Blockbuster economics: So you want to make a movie? BBC News. Available at: http://www.bbc.co.uk/news/business-17812247
O’Carroll, E. (2009, October 30). How ‘Paranormal Activity’ became the most profitable movie ever. Christian Science Monitor. Available at: http://www.csmonitor.com/Technology/Horizons/2009/1030/how-paranormal-activity-became-the-most-profitable-movie-ever. Accessed 2nd September 2016.
Sawhney, M. S., & Eliashberg, J. (1996). A parsimonious model for forecasting gross box-office revenues of motion pictures. Marketing Science, 15(2), 113–131.
Schwartz, M. (2009, October 16). Meet the stars of Paranormal Activity. Entertainment Weekly. Available at: http://www.ew.com/article/2009/10/16/meet-stars-paranormal-activity. Accessed 2nd September 2016.
Terry, N., Butler, M., & de’Armond, D. A. (2005). The determinants of domestic box office performance in the motion picture industry. Southwestern Economic Review, 32, 137–149.
Terry, N., Cooley, J., & Zachary, M. (2010). The determinants of foreign box office revenue for English language movies. Journal of International Business and Cultural Studies, 2(1), 117–127.
The Economist. (2016, February 27). Silver-screen playbook. The Economist. Available at: http://www.economist.com/news/business/21693594-how-make-hit-film-silver-screen-playbook. Accessed 16th August 2016.
The Numbers. (2016a). Domestic movie theatrical market summary 1995 to 2016. Available at: http://www.the-numbers.com/market/. Accessed 17th August 2016.
The Numbers. (2016b). Movie budget and financial performance records. Available at: http://www.the-numbers.com/movie/budgets/. Accessed 17th August 2016.
The Numbers. (2016c). Box office comparison for all-time top-grossing films. Available at: http://www.the-numbers.com/movies/comparisons/All-Time-Top-Grossing-Films. Accessed 17th August 2016.
The Numbers. (2016d). Box office history for Paranormal Activity movies. Available at: http://www.the-numbers.com/movies/franchise/Paranormal-Activity#tab=summary. Accessed 2nd September 2016.
Zufryden, F. (1996). Linking advertising to box office performance of new film releases—A marketing planning model. Journal of Advertising Research, 36(4), 29–41.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2018 The Author(s)
About this chapter
Cite this chapter
Gunter, B. (2018). Are the Most Expensive Movies the Most Successful?. In: Predicting Movie Success at the Box Office. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-71803-3_2
Download citation
DOI: https://doi.org/10.1007/978-3-319-71803-3_2
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-319-71802-6
Online ISBN: 978-3-319-71803-3
eBook Packages: Literature, Cultural and Media StudiesLiterature, Cultural and Media Studies (R0)