Uncertainty in the Movie Industry: Does Star Power Reduce the Terror of the Box Office?

Arthur De Vany and W. Walls

Journal of Cultural Economics, 1999, vol. 23, issue 4, 285-318

Abstract: Everyone knows that the movie business is risky. But how risky is it? Do strategies exist that reduce risk? We investigate these questions using a sample of over 2000 motion pictures. We discover that box-office revenues are asymptotically Pareto-distributed and have infinite variance. The mean is dominated by rare blockbuster movies that are located in the far right tail. There is no typical movie because box-office revenue outcomes do not converge to an average: revenues diverge over all scales. The studio model of risk management lacks a foundation in theory or evidence, and revenue forecasts have zero precision. Movies are complex products and the cascade of information among film-goers during the course of a film's run can evolve along so many paths that it is impossible to attribute the success of a movie to individual causal factors. The audience makes a movie a hit and no amount of “star power” or marketing can alter that. The real star is the movie. Copyright Kluwer Academic Publishers 1999

Keywords: star power; Pareto law; motion picture industry (search for similar items in EconPapers)
Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (126)

Downloads: (external link)
http://hdl.handle.net/10.1023/A:1007608125988 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jculte:v:23:y:1999:i:4:p:285-318

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10824/PS2

DOI: 10.1023/A:1007608125988

Access Statistics for this article

Journal of Cultural Economics is currently edited by Federico Etro and Douglas Noonan

More articles in Journal of Cultural Economics from Springer, The Association for Cultural Economics International Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().