John Sedgwick

Product differentiation at the movies: Hollywood, 1946 to 1965

In the post–Second World War period the floor fell out of the market for films in the United States. However, while the average revenue of films fell, the “hit†end of the market sustained itself. The growing inequality in the distribution of revenues meant that the risks associated with high-budget productions could no longer be balanced against the steady earnings of medium-budget films. During the 1950s the “majors†all became distributor–financiers as they reduced their exposure to the risks associated with film production. In doing this they retained their dominant position in the industry.

Profitability trends in Hollywood, 1929 to 1999: somebody must know something†

This article presents an overview of the development of the US film industry from 1929 to 1999. Notwithstanding a volatile film production environment, in terms of rate of return and market share variability, the industry has remained relatively stable and profitable. Film production by the film studios is interpreted as analogous to the construction of an investment portfolio, whereby producers diversified risk across budgetary categories. In the 1930s, high-budget film production was relatively unprofitable, but the industry adjusted to the steep decline in film-going in the postwar period by refining high-budget production as the focus for profitability.

Movie Stars and the Distribution of Financially Successful Films in the Motion Picture Industry

Film is a complex commodity. The productivity of a successful film and its star inputs can be considerable given the existence of a distribution network which aims to ensure that films can be shown at any place at any time on demand. In trying to capture this potential productivity, and rents that go with it, film producers ex-ante need to give potential audiences a set of unforeseen, but not unexpected pleasures which excite. In not knowing what they are about to experience audiences can only know ex-post whether or not their expectations have been met. This is the nature of the business as understood by Hollywood and has been so since the establishment of the industry in the early years of this century.

Modelling Skewness and Kurtosis with the Bcpe Density in Gamlss

This paper illustrates the power of modern statistical modelling in understanding processes characterised by data that are skewed and have heavy tails. Our particular substantive problem concerns film box-office revenues. We are able to show that traditional modelling techniques based on the Pareto–Levy–Mandelbrot distribution led to what is actually a poorly supported conclusion that these data have infinite variance. This in turn led to the dominant paradigm of the movie business that ‘nobody knows anything’ and hence that box-office revenues cannot be predicted. Using the Box–Cox power exponential distribution within the generalized additive models for location, scale and shape framework, we are able to model box-office revenues and develop probabilistic statements about revenues.

Stardom and the Profitability of Film Making: Warner Bros. in the 1930s

This paper examines the film production performance of Warner Bros. during the 1930s, placing particular emphasis on the manner in which Warners invested in stars. Warners are shown to have acted rationally in the sense of having consistently invested in previously successful actors. An assessment is then made of how successful such a strategy proved to be. Drawing a distinction between high and medium/low budget production, the deployment of established stars in high budget productions did not appear to have constituted a successful strategy. The production of medium/low budget films, by contrast, provided a more stable environment, in which there were clear returns to the deployment of previously successful actors.

Consumers as risk takers: Evidence from the film industry during the 1930s

This paper examines the risk environment of film consumption in the United States during the 1930s when moviegoing dwarfed all other paid-for leisure activities. We argue that the wide variability in the financial performance of films, reflecting the considerable risks that were involved in film production, can be interpreted as being mirrored in the risks incurred by consumers in the film consumption process. We further argue that production risk needs to be understood within the context of consumer risk. Using a dataset derived from the trade journal Variety, we examine the weekly fortunes of movies in first-run cinemas as consumers rapidly substitute movies that are currently on release for the promised pleasures of yet unseen movies. That expected utility was not always realised was commonplace, as was the pleasurable surprise that came with being thrilled by certain films. These are important results since, perhaps for the first time in modern society, they led to the emergence of the long right tail of consumer preferences for mass distributed goods.

Hollywood’s foreign earnings during the 1930s

ABSTRACT This work examines the importance of foreign markets to Hollywood during the 1930s. The work is empirical in nature and draws upon a financial data set (including foreign revenue streams) of all feature films released by the MGM, RKO and Warner Bros. studios during the decade. The work concludes that the idea that Hollywood garnered its profits from overseas, while meeting production costs at home, is too simplistic. An investigation of the 1790 film budgets found in the data set indicates that the most successful films overseas were big budget films that needed to be highly popular with domestic audiences if they were to be profitable. In developing this analysis, the idea of Hollywood producing films designed specifically for overseas markets is rejected.

‘Competitive Balance’ in the Top Level of English Football, 1948–2008: An Absent Principle and a Forgotten Ideal

Competitive balance is thought to be an important aspect of sport. Notions of ‘equity’ or ‘fair play’ appeal to the concept of competitive balance. Focusing upon the period between 1948 and 2008, this paper uses data from the top division of English football to investigate what has happened to competitive balance through the use of three measures. The first measure is an index, similar to a concentration ratio, that seeks to capture the extent to which the four most successful teams, by decade, have dominated the league. The second measure uses the Herfindahl index to discover the number of competitive teams in the league over the six decades. The final measure looks, season by season, at the probability of repeat success. The results suggest, from all three measures, that competitive balance has decreased and that the ‘beautiful game’ in England is in danger of becoming a monopoly of the few.

Michael Balcon's close encounter with the american market, 1934–1936

Michael Balcon is generally recognised for his stewardship of the Ealing Studios from 1939 and the portfolio of highly esteemed films which emerged over the decade 1942-52. Perhaps as a consequence of the critical preoccupation with those films, less attention has been given to his activities as Director of Production of what was Britains largest film organisation during the 1930s: Gaumont British (G-B). Based upon archive material held by the British Film Institute, The Michael Balcon Special Collection (MBSC) and the US box-office information contained in Variety, this article sets out to redress partly this state of affairs by concentrating on the organisations efforts, 1934-36, to become a major player in the world film industry; a rival in scale and output of the principal Hollywood studios.

Hollywood in the world market: evidence from Australia in the mid-1930s

By the mid-1930s the major Hollywood studios had developed extensive networks of distribution subsidiaries across five continents. This article focuses on the operation of American film distributors in Australia – one of Hollywoods largest foreign markets. Drawing on two unique primary datasets, the article compares and investigates film distribution in Sydneys first-run and suburban-run markets. It finds that the subsidiaries of US film companies faced a greater liability of foreignness in the city centre market than in the suburban one. Our data support the argument that film audiences in local or suburban cinema markets were more receptive to Hollywood entertainment than those in metropolitan centres.