Study: Box Office Estimates Inflated

16 Feb, 2012 By: Chris Tribbey

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A study of more than 1,000 films between 2003 and 2010 found that studio’s Sunday estimates for weekend revenue for films are on average 6.38% higher than the actual numbers revealed Mondays.

The study by the Stanford Graduate School of Business looked at data provided by Box Office Mojo and The-Numbers.com, and found some studios’ Sunday estimates were off by as much as 7.9% on average.

“The models studios use tend to be optimistic, which leads to inflation,” said Neil Malhotra, associate professor of political economy at the Stanford Graduate School of Business, and co-author of the study. “We also argue that there may be some strategy behind the inflation, [because] inflation is substantially higher in the first weekend of release, when the incentives are greatest to generate positive word-of-mouth. Buzz for the film can be generated by a good first-weekend performance and drive viewers to the theater in subsequent weeks.”

As an example the study points to the 2008 release of the animated film Delgo, which had a studio Sunday estimated box office take of $568,240. On Monday, the actual box office take was reported as $164,160. In 2010, Extraordinary Measures had a Sunday estimate of $2.14 million for the first weekend. Box office receipts on Monday had the total at $1.15 million.

The one-day delay in real numbers allows for positive press for a film, even if it isn’t deserved, the study argues.

“In other words, people may hear a film is popular and choose to watch it in its second week of release. So these studios often use opening weekend box office results in their advertising for the following week,” Malhotra said.

Malhotra stresses that the study’s findings don’t necessarily constitute fraud on the part of the studios.

“Not at all. We are simply reporting an empirical regularity,” he said. “Although our results are consistent with strategic behavior on the part of studios, the main purpose of the study is to stimulate additional discussion and inquiry by the media and the film industry.”
 

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