Abstract
Previous literature has documented the impact of critics on audience choices of movies. We investigate three issues regarding professional critics in the motion picture industry. First we document whether and to what extent critics and their recommendations exhibit a statistical bias toward specific studios. We show that reviews by a number of critics are significantly affected by the film distributor’s identity. A second question is whether audiences are able to distinguish between biased and unbiased critics. We cannot support the view that audiences put less weight on the views of biased critics; in fact, they may listen to them more. Third, we try to characterize critics who are more prone to bias. Surprisingly, but in accord with reputation models, we find that more reputable critics may be more biased; in particular, critics based in L.A. tend to significantly prefer specific studios.
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Notes
Differential access to information for financial analysts may have been reduced since the introduction of regulation FD. See Heflin, Subramanyam, and Zhang (2003).
See Bruce (2002).
As noted, direct cross ownership ties between studios and media outlets were not that common in the early 1990s, however, one cannot discount advertising and similar links. Unfortunately, there is no data related to the latter connection.
Basuroy, Chatterjee and Ravid (2003) find that negative reviews hurt revenues more than positive reviews help revenues in the early weeks of a film’s release. This suggests that whereas studios favor positive reviews and dislike negative reviews, the impact is not symmetric. However, that study did not investigate the box office effects of biased or unbiased critics, or critics who have or do not have corporate influence.
We acknowledge that due to the internet and the current availability of information, the extent of bias may have changed.
For the reader’s convenience, we include an appendix with definitions of all variables used in the analysis.
In Ravid (1999), however, star power did not end up being a significant determinant of either revenues or return on investment.
We note in Table 4 that each studio seems to influence some critics.
The coefficients on distribution houses are best interpreted relative to the omitted dummy for OTHER distribution house. If these OTHER, smaller distribution houses are on average able to produce a positive bias (relative to the larger distribution houses), then we would expect to find more negative than positive coefficients. However, in fact, we find almost twice as many positive significant coefficients (109) as negative significant coefficients (66), thus suggesting, as one might expect, that larger distributors are better at creating a positive bias among critics.
Typical applications of ordered probit in the literature include bond ratings, levels of education, opinion surveys, and many others (see the discussion in Greene, 2000).
We thank the referees for suggesting this direction.
We check Mergent, company histories on-line, annual reports, and Lexis/Nexis to determine ownership.
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We are grateful to the participants in the seventh annual workshop on the Economics and Business of Motion Pictures at the De Santis Center, Florida and to the editors and referees for many useful comments. We are responsible for any remaining errors.
Appendix
Appendix
Appendix A: Definitions of variables
Dummy variables include
MPAA ratings—G, PG, PG-13 and R where the default is unrated films.
UNKNOWN is a variable which receives the value of 1 if no actor or actress in the film appears in three standard references.
AWARD receives the value of 1 if any of the cast had received an academy award.
ANYAWARD, receives a value of one, if one of the actor/actress or director had been nominated for an award.
NEXT receives the value of 1 one if any leading member of the cast had participated in a top-ten grossing movie in the previous year.
SEQUEL receives the value of 1 if the movie is a sequel.
Non-dummy variables include
VALAWARD measures recognition value. For each of the 76 films in the AWARD category, we summed up the total number of awards and the total number of nominations.
LNDOMEST, LNINTER, and LNTOTREV denote the natural log of domestic revenues, international revenues and total revenues respectively for each film (total revenues include also receipts from home entertainment sales).
LNBUDGET is the natural log of the film budget.
RATE is total revenues/budget.
RELEASE is a seasonality variable, based upon Vogel (1998).
AVEREV, is an average over the reviewers of all critics, where a positive review is coded as +1, a mixed review is coded at a 0, and a negative review is coded as a −1.
GOODREV is the average proportion of “pro” reviews.
NUMREV stands for the total number of reviews a movie received.
VARREV is equal to the variance of the critics’ reviews.
NOBSREV is an index of critics’ opinions constructed only from those (30/56) whose opinions are not significantly impacted by distribution companies.
BIASREV is an index of critics’ opinions constructed only from those (26/56) whose opinions are significantly impacted by distribution companies.
Appendix B: Types of films
Appendix table 1: Ratings by distributor
Number of movies of each rating category handled by each of the major distributors in our sample.
Company | Number of movies | G | PG | PG13 | R |
|---|---|---|---|---|---|
UNIVERS | 18 | 1 | 3 | 7 | 7 |
WARNERBR | 16 | 0 | 1 | 5 | 10 |
BUENAVIS | 16 | 2 | 5 | 6 | 3 |
COLUMBIA | 14 | 0 | 5 | 5 | 4 |
PARAMNT | 13 | 1 | 2 | 4 | 6 |
FOX20 | 12 | 0 | 1 | 1 | 10 |
NEWLINE | 11 | 0 | 0 | 3 | 8 |
MIRAMAX | 10 | 0 | 2 | 3 | 5 |
FINELINE | 8 | 0 | 0 | 1 | 7 |
TRISTAR | 8 | 0 | 1 | 3 | 4 |
SAMGOLD | 7 | 0 | 0 | 2 | 4 |
TOUCHSTN | 5 | 0 | 3 | 0 | 2 |
ORION | 5 | 0 | 2 | 2 | 1 |
MGM | 4 | 0 | 0 | 2 | 2 |
DISNEY | 4 | 2 | 2 | 0 | 0 |
TRIMARK | 4 | 0 | 1 | 1 | 2 |
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Ravid, S.A., Wald, J.K. & Basuroy, S. Distributors and film critics: does it take two to Tango?. J Cult Econ 30, 201–218 (2006). https://doi.org/10.1007/s10824-006-9019-2
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DOI: https://doi.org/10.1007/s10824-006-9019-2