Business Analytics Blog

Business Analytics Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Talking Pictures

Category : Entertainment

This week in 1927, the first full-length 'talking' movie was premiered in the US: Al Jolson starring in 'The Jazz Singer'. This venture was a huge risk for the Warner Brother’s studio to take on, costing $422k ($5.2m in 2008 terms) when $250k was the usual ceiling. However, the risk taking was well rewarded when the movie grossed a total of $2.6m ($32.2m in 2008 terms) in the U.S. and abroad – 6 times the original investment. Are the high spending, risk taking studios rewarded in the modern movie industry? The most expensive movie ever made was Pirates of the Caribbean: At World’s End (2007) , it cost $300m, and grossed $1bn, only 3.3 times the investment. However, 7th on the list of most expensive movies is the latest episode in the James Bond franchise, Quantum of Solace. Craig’s second outing as Bond may not have seen temperatures rise quite like the first, but the costs certainly went through the roof. However, after earning £50 million in product placement and grossing $1.8billion at the box office, it proved to be the highest earning Bond film to date. (9 times revenue). Titanic (1997) had similar figures. As an interesting corollary, the biggest flop ever, i.e. the film that lost the most money was Town and Country (2001) starring Warren Beatty which lost $95m, not a movie I have heard of, but the keywords listed on IMDB are: New York, marriage, small town, traffic jam and fishing… who am I to comment?! Whether or not a movie flops is reliant on a plethora of factors, one of which is of course the prevailing economic climate. One interesting aspect of US cinema attendance is that during the Great Depression, which swept the United States in the 1930s, a higher percentage of the population went to the cinema each week than during the times of economic expansion and great prosperity the U.S. has seen since. We sourced GDP data from the office of national statistics, and UK cinema attendance data from the Cinema Exhibitors Association from 1948-2008 to understand whether this counter cyclical nature holds true on this side of the pond too.

Cinema.png

In the 5 instances of negative economic growth during this period (1974, 1975, 1980, 1981 & 1991) only 1974 and 1991 saw growth in cinema attendance (3.2% and 3% respectively). In fact, cinema attendances did not experience an annual growth at all between 1949 and 1973. Should the rise in ’74 been seen as a portent of the difficult times ahead? To examine whether there may be a statistical dependency of the cinema attendance figures on the change in GDP, we performed a regression analysis. This plots the two datasets against each other and calculates the line of best fit for the data, and then measures how well this line fits. The measure of fit is given as the R squared value, where 1 indicates a strong relationship, and 0 no relationship. The R squared value in this instance was 0.002! This means, that although a couple of countercyclical examples can be found amongst the data, there is no overall relationship across the years. The cinema, it appears, is not The Great Escape that The Producers hope for when the economy is Gone With The Wind.

About the author

kroy

Leave a comment

Your email address will not be published. Required fields are marked *.