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Big budgets, big openings, and legs: Analysis of the blockbuster strategy

by Walls, W. D. and DeVany, A.

The blockbuster strategy---using big budgets, stars, and advertising to create high opening week box office grosses---is based on the theory that motion picture audiences follow an information cascade by choosing movies according to how heavily they are advertised, what stars are in them, and their revenue ranking in the box-office tournament. Opposed to this theory of choice based on herd-type behavior is the view that quality matters and that through the communication of personal quality information the audience will turn a non-informative cascade of the opening into an informed cascade in which quality signals dominate quantity signals. In this paper, we examine the blockbuster strategy using a sample of more than 2000 motion pictures exhibited in the US between 1985--96. Contrary to the blockbuster strategy, we find that the opening is less critical for successful than for unsuccessful films. The movie-going audience cannot be manipulated and a movie will be a hit only if it engages a positive word-of-mouth information cascade.

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