Good Movies Actually Do Better at the Box Office

Conventional wisdom would say that movie-going crowds reward some of the worst movies with some of the highest box office grosses, particularly during the summer months. In fact, there are web sites devotes to that very premise.

It is an interesting and amusing thought … but is it TRUE? That is what one person looked to answer, using available data and statistical analysis.

Here is the setup:

It is common to argue that there is a divide between critics and audiences. Critics prefer arthouse dramas, preferably in black-and-white; audiences like things that go boom. Thanks to countless explosions and few positive reviews, the Transformers sequels became a lightning for this argument. Compare the 35s of Transformers: Dark of the Moon: 35% on Rotten Tomatoes, $350 million at the domestic box office. Later in the year, a critical darling like Warrior (83% on RT) managed just over $13 million. Is this the general pattern, or are these exceptions to the rule?

For the latest entry of Cinemath, I crunched the numbers to answer this very question. Thankfully the answer is that good movies statistically do better at the box office. After the jump, I try to quantify this effect with an equation that predicts box office using the Rotten Tomatoes score, budget, theater count, plus whether the movie is a sequel and/or rated PG-13.

Here is the MiniTab output showing the results. For the analysis he used five factors: RT (RottonTomatoes score), estimated production budget, number of theaters, and a binary indicator of whether the movie was a sequel and if it was PG-13 or not. Using these as predictors, he came up with a regression equation that accounted for 65% of the variability. It is likely he could have improved the fit using some non-linear factors, possibly using interactions in an unbalanced analysis, and as he mentions in the article transforming the output. But overall it is fairly solid.

•An extra 10% on RT is worth about $6 million at the box office.

•An increase of $1 million in budget is worth about $0.5 million at the domestic box office. At first, that looks like a loss. But keep in mind that this does not include international box office, DVD sales, or ancillary revenue.

•An increase of 1,000 theaters is worth about $25 million at the box office.

•Sequels are predicted to earn about $50 million more at the box office.

•A PG-13 movie is predicted to earn about $25 million more at the box office.

And because a regression analysis is a ‘best fit’ model of the existing data, it is neither an absolute answer nor an absolute predictor.

For instance, the equation predicts Dylan Dog would make –$24.5 million, when it actually grossed $1.2 million (basically the numerically possible equivalent). And the model isn’t really equipped to handle the megahits, totally underestimating the likes of Harry Potter and the Deathly Hallows, Transformers 3, Twilight: Breaking Dawn, and The Hangover 2. That may mean I am missing an important factor or need to tweak the model. On the other hand, those could just be outliers that can’t be predicted using basic data analysis. As a counterexample, the model would have been ready for the surprise success of Rise of the Planet of the Apes, predicting $178.6 million for the PG-13, critic-approved sequel that ultimately grossed $176.8 million.

I have to admit that the results are different and a better fit than I expected. My expectation was that there were so many blockbusters touted by movie companies that it would blow out the ability to get a reasonable fit. So sure there are plenty of movies like ‘Transformers’ that prove the ‘people will over-pay for crap’ adage, they are the exception, and in general there is a link between several factors including how well the movie was reviewed that have a direct correlation to how much money the movie will make.

Source: Cinemath via Minitab Blog

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