This document summarizes research on how preannouncements of new movies can impact audience anticipation and box office revenues. It provides a conceptual model of how message content, timing, changes to initial announcements, studio advertising, and third party reviews influence market anticipation and box office performance. Key elements of the model include: - Message content like casting stars or "Oscar buzz" can increase anticipation. - Timing of announcements impacts anticipation, which increases rapidly then diminishes in an inverse U shape as release nears. - Changes to initial announcements may undermine credibility but don't deter movie success. - Anticipation drives box office, especially opening weekend revenues. Studio advertising and reviews also impact these relationships.

1. Action! Lights, Camera: The Effect of Preannouncements on Experience Goods
The Case of the Motion Picture Industry
Michael Wachter—Cleveland State University
Abstract: Since the Golden Days of the Silver Screen, the motion picture Literature Review Conceptual Model of the Effects of New Product Preannouncement in the Motion Picture Industry
industry has employed preannouncement strategies prior to the release of  In the consumer decision making process for movies, the “time to decide” is
characterized by the consumer receiving intensive information about the film,
new movies. Firms developing new products often execute primarily through market signaling (Sawhney and Eliashberg 1996).
preannouncements to signal the market of its plans to commercialize a New Product Preannouncement
 Studios signal potential audiences through casting decisions (Ravid 1999;
new market offering. Following a thorough assessment of the risks and Treme 2010), prerelease advertising (Basuroy, Desai, and Talukdar 2006; Message
benefits associated with preannouncement, the firm must decide which Elberse and Anand 2007; Zufryden 1996), and the production of sequels Content
(Basuroy, Desai, and Talukdar 2006; Terry, De’Armond, and Zachary 2009).
information to announce to whom and at what time. Much of the research  Oscar Buzz
conducted in this stream focuses on search products; little work includes  External factors, like third party reviews from critics, also signal about the  Star Power
quality of the upcoming movie (Eliashberg and Shugan 1997; Terry,
experience goods, such as motion pictures. This research is perhaps the De’Armond, and Zachary 2009).
first to link the dimensions of preannouncement strategy to market  Message Content: Homberg, Bornemann, and Totzek (2009) suggest various
anticipation for new films and first weekend box office revenues. messages will impact new product outcomes differently. P2 P1
 The connection of a motion picture with “Oscar buzz” has the potential to
increase box office revenue (Terry, De’Armond, and Zachary 2009) and Market Box Office
Selected Timelines for Preannouncement Publicity generates consumer conversation about the new movie. Timing P3 P6
Anticipation Revenues
 Treme (2010) suggests 45% of consumers choose a movie based upon actors
Gone with the Wind Brokeback Mountain
cast. The audience speculates about the casting decision, increasing the word-
Event Details of the Event Date Details of the Event Date of-mouth information about the movie (Liu 2006) which may moderate the P5
Movie Rights Selznick pays $50,000 for 07/11/1936 Annie Proulx sells rights to 12/19/1998 P4
impact of negative reviews by critics (Basuroy, Chatterjee, and Ravid 2003).
Secured rights to Gone with the Wind. Brokeback Mountain for P7b P8
undisclosed amount.  Timing: Studios potentially benefit from an early preannouncement strategy. Lilly
Director George Cukor is selected to 09/12/1936 Gus Van Sant is chosen to 01/08/1999 and Walters (1997) list four factors that influence how early an organization can
Announcements direct Gone with the Wind. direct for Brokeback Mountain. preannounce: lack of competitive retaliation, lack of cannibalization, innovative/ Number of
Changes P7a
George Cukor is selected to 09/12/1936 Ang Lee is signed to direct 01/17/2004 new-to-the-world products, and the buyer’s decision making process.
direct Gone with the Wind. Brokeback Mountain.  Patents act as a competitive barrier to entry for a firm (Porter 1980). In the
Selected Casting Tallulah Bankhead 12/22/1936 Heath Ledger and Jake 01/18/2004 motion picture industry, a studio negotiates the exclusive rights to develop a
Announcements auditions for Scarlett Gyllenhaal are selected to script, limiting a competing studio’s ability to copy the innovation. Studio
O’Hara. play the leads in Brokeback
 Cannibalization is limited as a studio needs a continually renewing portfolio of
Advertising
Miriam Hopkins and Clark 03/19/1937 Mountain.
Gable are cast as Scarlett new movies due to the relatively short product life cycle associated with a new
O’Hara and Rhett Butler. movie (Terry, De’Armond, and Zachary 2009; Zufryden 1996).
Norma Shearer is cast as 06/24/1938  Given the social context of motion picture as an experience product, there is a Third Party
Scarlett O’Hara. high level of buyer involvement in movie selection (Zufryden 1996). Reviews
Norma Shearer declines 08/01/1938
Scarlett role due to fans.
 Number of Changes: Changes to the initial market signal may detract from a
firm’s reputation and could prove detrimental to new product launch. Missing
Warner Bros. to loan Bette 09/21/1938
promised launch dates and product attributes from preannouncements threatens
Davis for Scarlett O’Hara.
the firm’s credibility and the success of a new product that does not meet buyer Proposition 1: Audience expectations of the new movie may increase with specific message content. Including information on the
Carole Lombard is cast to 12/18/1938
expectations (Eliashberg and Robertson 1988; Herbig and Milewicz 1996). casting of well-known celebrities or rumors of award nominations increases levels of market anticipation for an upcoming motion
play Scarlett O’Hara.
Vivien Leigh is cast as 01/14/1939  Changes in the initial announcement do not appear to deter from the studio’s picture release.
Scarlett O’Hara. reputation of the movie’s success.
Proposition 2: Message content indirect impacts market anticipation due to its partial dependence on new movie preannouncement
Release Gone with the Wind opens in 12/15/1939 Brokeback Mountain opens in 12/14/2005  The number of communiqués that a studio can issue for about a particular
Atlanta amidst parades, limited release 12/09/2005. timing.
movie is in direct proportion with the timing of the first announcement.
balls, and antebellum First weekend receipts are
costuming. $545,000 in five theaters.  Market Anticipation: Wind and Mahajan’s notion of creating “marketing hype” Proposition 3: The length of time from the initial preannouncement to the movie’s release impacts market anticipation increases
for a new product (1987) culminates in building market anticipation by generating rapidly and diminishes over time non-monotonically in an inverse U relationship.
interest and curiosity (Schatzel and Calantone. 2006). Word-of-mouth may be a
12/17/2007: Peter Jackson ousted as director; Sam Raimi strong predictor of a movie’s box office revenue, particularly in the first few Proposition 4: The number of changes made to the initial new movie preannouncement positively mediates the relationship between
being courted. 318 references to weeks after the film is release (Liu 2006). preannouncement timing and market anticipation.
The Hobbit movie  Studio Advertising: Research estimates advertising expenditures of 27% of
04/26/2008: Guillermo del Toro signed on as director. Proposition 5: The number of changes made to the initial preannouncement increases the amount of word-of-mouth about the new
(Lexis-Nexis) revenues for the motion picture industry compared to about 4% for other
06/01/2010: Guillermo del Toro resigns as director. experience products (Basuroy, Desai, and Talukdar 2006; Zufryden 1996). Studio film initially, but has a non-monotonic relationship (inverse U) with market anticipation.
12,560 tweets advertising seems to have an effect on a modified hierarchy-of-effects model
10/21/2010: Peter Jackson reinstated as director; (Topsy)
announces casting decisions. where advertising leads to awareness of the movie, intention to see the film, and Proposition 6: As market anticipation increases for a movie, so do box office revenues, being strongest in the opening weekend of the
finally, a ticket purchase (Zufryden 1996). film release and lessening over time.
03/22/2011: Production begins on The Hobbit.
 Third Party Reviews: Research suggests two roles of critics – as influencers and
predictors of a movie’s attendance (Eliashberg and Shugan 1997). Another study Proposition 7a: The level of studio advertising positively influences the relationship between new movie preannouncement behaviors
quantifies the impact of third party reviews, stating a 10% increase in approval and market anticipation for the new movie.
adds $1.2 million to $1.7 million to opening week box office revenues (Terry,
Download a copy of this poster and a list of references using the
De’Armond, and Zachary 2009). Others suggest that, over time, the valence of Proposition 7b: The level of studio advertising positively influences the relationship between market anticipation and opening
QR code at the left. This information is also available at the review impacts its effect on revenues; the adverse impact of less favorable
www.slideshare.net/mwwachter or by emailing the author at weekend box office revenues.
reviews outweighs the positive impact of favorable reviews especially during the
m.wachter@csuohio.edu. movie’s opening week (Basuroy, Chatterjee, and Ravid 2003). Others posit the Proposition 8: Reviews impact the relationship between market anticipation and opening weekend box office revenues in a direct
quantity of reviews, not the valence, affects a new movie’s outcome (Ravid 1999). manner relative to the valence of the review; a positive (negative) review denotes a positive (negative) relationship.