Entertainment Economics

The experience nature of movies makes box-office ticket sales unpredictable and uncertain. As such, consumers look for indicators, or signals used by producers, that infer cues of product quality and entices information cascading through social learning. The study investigates how social learning and information cascades explain box-office ticket sales for blockbusters, sleepers and flops, thereby reducing the risks inherent in movie production.  Using appropriate regression estimation procedures, the 2003 box-office ticket sales in the Philippines shall be explained using specific indicators of social learning and movie signaling.  Then the resulting model shall be applied to specific films entered in local film festivals capturing the decisions of producers and directors to the films’ revenues. The signaling effect of pre-release advertising matters significantly in creating film awareness.  Empirical results show that higher levels of advertising expenditure, brand-related variables such as veteran actors, directors and sequels correlate high with box office earnings and allow a long and stable diffusion process on the movie’s attributes, allowing information to develop into experienced knowledge.  When the information obtained from cascades is deemed stable, knowledge creation results and local producers are encouraged to make movies that possess attributes which consistently explain box-office success.

The experience nature of movies makes box-office ticket sales unpredictable and uncertain. As such, consumers look for indicators, or signals used by producers, that infer cues of product quality. These signals infer product quality and entices information cascading through social learning. We investigate how social learning and information cascades explain box-office ticket sales for blockbusters, sleepers and flops, thereby reducing the risks inherent in movie production.  Using appropriate regression estimation procedures, the 2003 box-office ticket sales in the Philippines shall be explained using specific indicators of social learning and movie signaling.  Then the resulting model shall be applied to specific films entered in local film festivals capturing the decisions of producers and directors to the films’ revenues. The signaling effect of pre-release advertising matters significantly in creating film awareness.  Empirical results show that higher levels of advertising expenditure, brand-related variables such as veteran actors, directors and sequels correlate high with box office earnings. In terms of film creativity, local producers are encouraged to make movies that are in line with the comedy genre as they cater to a wider range of audience.

Key Words:  information cascades, signaling, social learning, word-of-mouth

Suggested Citation:  Dacanay, Jovi C., Maia Tyche King-Calvo, Angelo Anastacio Santos (2010)  “Information Cascades as Social Learning: The Case of Box-Office Ticket Sales in the Philippines”, Proceedings of the European Conference on Knowledge Management; 2010, p334-344.  (http://search.ebscohost.com/login.aspx?direct=true&db=lxh&AN=53491612&site=ehost-live)