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Taking the Mystery Out of Box-Office Winners

Mark Houston’s marketing formula calculates and predicts entertainment success.

Mark Houston, the Eunice and James L. West Chair in Marketing at TCU, says entertainment executives can combine data analytics with intuition and scholarly research to increase success. Photo by Rodger Mallison

Taking the Mystery Out of Box-Office Winners

Mark Houston’s marketing formula calculates and predicts entertainment success.

For decades, the “Nobody knows anything” mantra has ruled the entertainment industry. 

Coined by legendary screenwriter William Goldman (of All the President’s Men and Butch Cassidy and the Sundance Kid fame), the underlying theory is that no one can predict which new movies, songs or other entertainment products will succeed and which will fail. Instead, media executives have relied on gut feelings to make decisions ranging from which actors to feature in a film to when to release an album.

Mark Houston, the Eunice and James L. West Chair in Marketing at TCU, challenges that tradition in his first book, Entertainment Science: Data Analytics and Practical Theory for Movies, Games, Books, and Music (Springer, 2019).

“Actually, we do know a lot,” Houston said. “There are techniques to test your intuition on when to release a film and who to star in it. And you should use what you know to make better decisions.”

Houston and co-author Thorsten Hennig-Thurau, professor and chair of marketing and media at the University of Münster in Germany, made the case that Goldman’s adage doesn’t hold up in the digital age.

“There are techniques to test your intuition on when to release a film and who to star in it. And you should use what you know to make better decisions.”
Mark Houston

Instead, they suggest entertainment executives combine data analytics with intuition and scholarly research to increase the probability of success for a new product.

The book “offers a new paradigm and thus a new way of thinking,” said Natasha Zhang Foutz, an associate professor of commerce at the University of Virginia who specializes in data in entertainment media. “As so many industries are trying to leverage big data and artificial intelligence to gain competitive advantage, theory and … analytics become a must — not an option — for the entertainment industry.”

Despite its 865 pages and comprehensive look at more than 35 years of scholarly research in fields such as marketing and economics, Entertainment Science is accessible to a broad audience.The book is geared toward scholars, students and industry executives, Houston said.

Although the book covers movies, books, music and video games, the majority of its real-world examples are movies because that’s where Houston and Hennig-Thurau have done most of their research.

The duo have collaborated on two dozen articles and presentations on the factors influencing a movie’s box office success and profitability. Houston has also been a visiting professor at the University of Münster for a decade.

With the book, they aimed to give entertainment executives a better way to figure out consumer preferences before investing as much as $500 million to make and market a movie or video game. Entertainment Science takes a market-centered approach by focusing on winning customers in a competitive industry.

“The making of movies is typically done by artists who are bound by business constraints,” Houston said. “It takes money to turn their vision into reality, and the commercial success greatly affects whether they get more money to do more movies.”

Thus, “the focus can’t be just on the artist or just on the business, but on the intersection of what makes the best product for the customer.”

The book notes that streaming services such as Netflix and Amazon have figured this out. They use sophisticated algorithms to determine what customers want to watch, how and at what price, said Houston, noting the success of Amazon’s The Man in the High Castle series and Netflix’s Bird Box movie.

The book says that factors including brand awareness, big stars and packaging drive success. Money-making products, however, increasingly depend on pre-release buzz, or consumer anticipation for the product, which can come from advertisements or social media.

Mark Houston said streaming services like Netflix and Amazon use sophisticated algorithms to determine what customers want to watch, how and at what price. Photo by Rodger Mallison

Mark Houston said streaming services like Netflix and Amazon use sophisticated algorithms to determine what customers want to watch, how and at what price. Photo by Rodger Mallison

Houston’s book reveals that a film’s Facebook page and social media posts by top stars boost box office results. Of the more than 90 million people who watched a trailer for the remake of Beauty and the Beast, nearly half came from lead actress Emma Watson’s social media channels.

The authors learned that “paying Vin Diesel big bucks for keeping his fan base informed via social media can make a lot of sense,” Hennig-Thurau said. They also learned that “remakes function differently than sequels — [remakes] are way less safe bets.”

Still, not all sequels are created equal. Why was Fast & Furious 6 a hit, but Basic Instinct 2 a flop?

Perhaps the answer lies in a formula co-developed by Houston to predict a sequel’s performance. The equation calculates the forward-spillover effect, which reflects the positive impact of the parent brand on a movie sequel. It also considers the effect of star awareness.

The formula predicted that Spider-Man 2 would generate box office revenue of $763 million, close to its actual gross of $783.8 million. A sequel that had been similarly cast, funded and promoted but without the established superhero brand would have resulted in $53 million less revenue for the studio. A separate analysis calculated that box office revenue would have been reduced by half had lead actor Tobey Maguire not returned for the sequel.

The performance predictions are “within 95 percent accuracy” based on certain actors, Houston said.

“The stuff we do works,” he said. “Art and business have been viewed as enemies, but the truth is somewhere in the middle.”