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Modeling Movie Life Cycles and Market Share

Andrew Ainslie
Xavier Drèze
Fred Zufryden

Marketing Science
2005, Vol. 24 (3), 508-17

In this study, we examine box office sales in the context of a market share model. Rather than studying movies in isolation from each other, as has been done traditionally, we account for the variety of movies available to moviegoers at any given time. This is accomplished by developing a combination of a sliding-window logit model and a Gamma diffusion pattern, in a hierarchical-Bayes framework. Using our model, we show that accounting for the full choice set available every week not only increases the fit of weekly movie sales, but also leads to parameter estimates that depict a richer picture of the movie industry. We show that movie studios appear to have a good understanding of the products they produce, knowing when to support them and when not to. We also show that the large studios are correct in their product segmentation strategy of mainstream versus artistic movies and that many studios behave in accordance with Krider and Weinberg's (1998) model of movie release timing.

Our research indicates that actors have a direct effect on consumer choice. This leads viewers to watch the movie earlier in its release. Directors have a more indirect effect on consumers. Finally, releasing a movie at the same time as other movies of the same genre adversely affects box office performance all around; releasing a movie against movies of the same MPAA rating hurts its sales in the beginning, but there is a displacement effect which means that in the long run sales loss is less severe.
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