Andrew Ainslie


MARKET SHARE MODEL ADDS NEW DIMENSION TO STUDY OF MOVIE MARKETING


Andrew Ainslie looks at movie sales in the context of competition


Not long ago, researcher Xavier Dreze posed a question to UCLA Anderson Associate Professor Andrew Ainslie. He wondered if empirical evidence could show whether a movie studio should change the release date of a motion picture if it was scheduled to open against a strong competitor. The question has multi-million dollar implications for movie revenues and has plagued Hollywood for years.

“Studios have tended to rely on anecdotal evidence and gut instinct when making this kind of decision,” says Ainslie. But he and Dreze, who will join the UCLA Anderson marketing faculty this summer, analyzed data for 825 movies released over a three-year period and found that there are some cases in which it clearly makes financial sense to advance or postpone a release. The results are presented in a paper they co-authored with Fred Zufryden of USC called, “Modeling Movie Life Cycles and Market Share.

“It’s a bit of a mixed answer,” says Ainslie, “but clearly you don’t want to come out against a movie that is stronger than you and that competes for the same audience. For example, you don’t want to be the second best action movie on a given weekend. And the problem is, everyone wants to open on a big weekend like Memorial Day weekend. So the question is, are you better off being the second biggest movie on Memorial day … or the biggest release on a quieter weekend?”

A variety of things come into play when thinking about the nature of movie competition. What is a film’s genre? What is its Motion Picture Association of America (MPAA) rating? Is it targeted for a male or female audience? The more of these characteristics a film shares with a stronger competitor, the more sense it makes to open on a different weekend.

The study also finds that a film need not move its release date to avoid a strong film intended for a different audience. “Not hugely surprising right?” says Ainslie. “But it’s one thing to suspect that and another to get empirical evidence.”

Another factor studios consider is whether a competing film has a major star. “We found that films with a major star tend to open stronger than those without one,” he says. This could be another reason to avoid a head-to-head opening. But the study also shows that a major star does not always guarantee long-term box office success.

Ainslie and Dreze learned these things by adapting a statistical model that had previously been used to study other markets. The technique involves taking weekly snapshots of the movie market over the course of a film’s release so that its sales are seen in the context of its competitors.

“Our version is what we call a sliding window in that there were different sets of competitors week by week,” he explains. “Our innovation was to think about this sliding window of competitors over time as movies entered and exited the market.”

Ainslie says that most markets are relatively stable compared with the movie industry. “We have two years of data and no movie ran for longer than 20 weeks,” he says. “Every week you’re looking at a different competitive set. So that made it a very interesting problem methodologically.”

The technique produced what Ainslie calls a diffusion curve, which depicts a film’s sales from opening to close. This shows, among other things, when a film’s sales peak. “The classic blockbuster opens strong and gradually declines in sales,” says Ainslie. A sleeper, on the other hand, generally starts slowly but grows over time. This distinction is important to studios since they take a higher percentage of their profits early in a film’s release. Theater owners, on the other hand, generally see more revenue from sleepers.

The study makes two observations about movie studios. One is that they tend to distinguish between potential blockbusters (mainstream films) and sleepers (art-type films) and often have separate divisions to handle them. For instance, Fox Filmed Entertainment releases mainstream movies through 20th Century Fox and independent or foreign films through Fox Searchlight. “This suggests clear and strategic decision-making by the studios,” he says.

The second observation is that 20th Century Fox and New Line seemed to have timed the release dates of their films most effectively during the period of the study. Findings suggest that other studios lost sales by releasing films against tougher direct competitors or by choosing off-weekends when few moviegoers went to theaters.

The study has attracted attention from studios. “We have found that some studios are becoming more sophisticated in their marketing research,” says Ainslie. “One person we spoke with at a major studio actually has a Ph.D. in Marketing.”

This study is particularly useful in an industry where it’s historically difficult to predict sales. Ainslie says, “It’s very hard to tell what constitutes a successful movie beforehand. This must be true because some very famous producers, directors and studios have made terrible movies. And some unknown directors and studios have made incredible movies. So it’s nice to have a methodology that helps understand how the movie market works from a lot of different angles.”