The hierarchy-of-effects model and prelaunch forecasting

Jonathan Lee and Heungsun Hwang

Pre-release forecasting of the opening box office revenue allows a studio to prepare a more effective marketing campaign and budget allocation.

Introduction

In nearly every industry, the introduction of new products and services is replete with dangers. The motion picture industry may represent the ultimate in risky businesses. For the motion picture industry, every motion picture is new. Unlike other services whose revenue comes primarily from repeat sales of existing services, studios get nearly all their revenue from new films. For many motion picture studios, opening weekend ticket sales are a strong predictor of a film's overall financial success. A stellar opening weekend lays a solid foundation for international ticket sales, TV, and cable sales and even the DVD and home...

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