How studios can stimulate ticket sales in local markets
When the movie Gravity opened in theaters earlier this month, the Sandra Bullock-George Clooney space odyssey brought in $55.6 million in its opening weekend and broke the box office record for the biggest October opening of all time. A combination of early critical praise, consumer “buzz,” and star power helped to drive a record number of moviegoers into theaters that weekend, leaving competitors like Cloudy With a Chance of Meatballs 2 pulling in half that amount in box office receipts.
So does this mean that if you're a studio head you should just resign yourself to less-than-stellar box office openings if you don't have a movie with huge stars and early critical praise?
Not necessarily. A recent study by Pradeep K. Chintagunta of Chicago Booth, Shyam Gopinath of the University of Utah, and Sriram Venkataraman of UNC-Chapel Hill reveals some factors that studios can control to boost how their movies perform at the box office.
What 's unique about the movie industry is that a sizeable proportion of its revenues comes from the opening weekend. For example, Shrek 2's opening weekend in May 2004 accounted for 24.7 percent of its domestic box office receipts. And while there have been nationwide measurements of box office performance, no one has taken a more granular look at how these elements affect box office performance in local markets until now.
The study examined the pre- and post-release performance of 75 movies released in 2004 in 208 geographic markets in the United States across three measures: Nationwide consumer generated blog volume; blog “valence”—a positive or negative sentiment written by a blogger—and studio advertising.
The study revealed that, with respect to blogging and advertising, gender, income, race, and age of the local population are the biggest indicators of how a movie will perform in individual markets.
Overall, release day performance is impacted most by pre-release blog volume and advertising, while post-release box office performance is influenced by post-release blog comments and reviews and advertising.
In terms of income, higher income people have adopted the internet more readily, but once online, lower-educated and lower-income consumers spend more time online, giving them greater exposure to blog posts. There have also been various studies that show that younger, lower income and lower-educated people can be more influenced by advertising than higher educated people.
In regards to age, blog readers tend to be young, so the local readership will likely mimic the area’s demographics. If the population skews older, blogs will have less impact on moviegoers' behavior.
The biggest impact on box office performance, however, is gender. A higher proportion of women in a population lowers box office performance with respect to blog valence and advertising much more than any other demographic feature.
As a result, the authors have drawn some general conclusions: Having more women in a market makes it less sensitive to blog sentiments and less sensitive to advertising; having more young consumers in market enhances the impact of blog volume but lowers the effect of blog valance; and high income markets are less responsive to blog sentiments and advertising.
Taken together, these three findings suggest that studios engaging in spot advertising may want to reduce their advertising in markets with higher income, as well as those with more women and more younger consumers. Furthermore, markets with larger white populations are more sensitive to advertising—studios might want to direct more advertising in these markets. At the same time, markets with large white populations are less sensitive to blog valence.
Chintagunta, Gopinath and Venkataraman also ranked the top 20 markets according to blog volume, blog valence, and advertising. Their data didn't show any natural geographic or regional grouping, but did reveal some general trends. The markets highly responsive to advertising seem to be concentrated in the Midwest, and the markets less responsive to both blogs and advertising seem to be in the East Coast.
Several large markets for box office revenues, such as Denver, Los Angeles and Chicago, rank high for being sensitive to “buzz.” These same markets, however, are much less sensitive to blog valence and advertising.
Markets that are sensitive to post-release blog valence tend to include smaller towns such as Baton Rouge, Louisiana, and Springfield, Illinois,, and there a few medium-sized cities such as New Orleans and Rochester, NY, that are very responsive to advertising.
These rankings can provide studios with information on how to target release markets, especially if a movie is in limited release. For instance, if a studio wanted to generate pre-release buzz by having special events around a movie, Chicago and Denver would be smart markets to choose. And if a studio wants to market its advertising more judiciously, cities like Charlottesville, Virginia, or Marquette, Wisconsin, are smart bets.
The authors also also discovered which kind of genres do well in certain large markets. In New York, for example, comedies perform better at the box office than thrillers.
Currently, at the time of a movie’s first release, studios cover only 53 percent of the most responsive advertising markets and 44 percent of the most responsive markets to pre-release blog volume, thus leaving considerable room for improvement for pre- and post-marketing efforts for movies.
If studios take into account the findings revealed in this study, they would be able to target their marketing strategies more judiciously and drive more moviegoers into theaters. And while every movie can't have a blockbuster opening like Gravity, there's plenty of money to be made from more modestly performing films.
—Mary Ellen Egan