An Economist Goes to the Movies
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Sangeeta Goyal (New Delhi, India)
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An Economist Goes to the Movies
Economics is generally perceived to be an arcane and abstruse if not a downright dismal science. When people think of economics (if they do so at all), they think about markets, the budget, the growth rate, interest and tax rates, the rising rupee, the falling dollar and the wealth and poverty of nations – serious nerdy stuff full of cold-blooded numbers. But economics is more than these (albeit important) things.
It is also a clever and rigorous way of thinking about human behavior and choice, both individual and collective. It can be and has been used to analyze phenomena as diverse as love, marriage, and divorce. It provides enough flexibility to bring into the picture non-economic factors such as identity, perception, values, talking and gossiping and trace out their role in economic outcomes such as our choice of jobs and education. It has borrowed arguments from evolutionary biology to track social and cultural movements and developed the theory of games to provide explanations for strategic behavior including mating and dating. The use of new technology (invented or borrowed and adapted) can not only explain why some countries are so much farther ahead in the growth race than others but also the changing models of entertainment retail (think of Amazon or Rhapsody).
Can an economist go to the movies or to the T20 cricket game with her bag of thinking tools alongside her tub of popcorn? For sure! Economists have used their disciplinary acumen to throw light on phenomena central to entertainment and sporting industries such as the presence of a few super-stars with galactic salaries vis-à-vis the rest eking out the opportunity cost of their time and talent; or the correct interpretation of hot streak of goals, baskets and centuries by the likes of Beckham, Kobe and Yuvraj Singh. It therefore is not at all remiss if an economist goes to the movies (or the stadium) and brings back observations and insights that are both entertaining and illuminating.
In this post, we begin at the beginning. What makes a movie a hit? What do we know about how people choose which among the many releases of the week they will actually pay good money to see? Here we are not talking about niche audiences – the small group of people collected around a particular intense actor or an auteur director. We are talking about the masses of people who do not have extreme preferences and therefore much more in need of wooing. This is a valid question to probe – otherwise every movie would be a hit. Having the right list of ingredients – script, story and quality of direction and acting – may make a great movie but not always a successful one.
The big secret is, alas, that we do not know what makes a film a big hit or a miserable flop. Okay, I can imagine some people snickering at this long-winded way of saying something that is common knowledge among all those who are associated with the making and showing of films in any way. But it is better to know precisely what you do not know than to wallow in simple and crude ignorance. Let us then try to understand in a few different ways why it is not easy to predict a hit from a miss.
1. A blockbuster hit film is what mathematician Nassem Taleb calls a Black Swan (BS) phenomenon. A BS event has two key features – it is hard to predict and it has a large impact. The reason why such events are unpredictable a priori is because they are so rare – there are not enough of them to allow estimation of their likelihood of occurrence with confidence. Other examples of BS events are the Harry Potter books. (There is also another feature associated with a BS event – the tendency of people to be able to explain it away after the fact).
2. The relationship between the status of a film being a hit or a flop is not linearly related to its characteristics. For example, there is no guarantee that if you spend a million dollars in promoting a film, you will get a certain return of five million dollars (otherwise those with the deepest pockets would always pip others to the winning post). Movie promos are only one way to catch attention. Word of mouth is another. Word of mouth creates feedback loops that can magnify success or failure to explosive proportions. In the presence of such feedback loops, even a small change can make a large difference once they cross the tipping point. (100 people see the movie the first time round. Each talks to 20 people (20×100=2000), who in turn talk to another 20 people (2000×20=40000) and so on. Even a few people have the potential to spread the word to a mind-bogglingly large number). Once the tipping point or threshold is crossed, a small fever can become a raging epidemic. It depends on how many people catch the virus. This is a non-linear effect that again cannot be predicted with much confidence. (Promoting a film by way of advertising is in ‘control’ of the marketing departments of films, but word of mouth is not. Having more control can boost confidence but not necessarily actual returns).
This is not to say that film-makers and producers are totally without recourse to ways in which they can ensure large audiences as quickly as possible. The presence of big stars is one such way if you can afford to do so. But there are only a few of them. Music is another way to bring in the audience and the moolah. All of these are of course neither necessary nor sufficient factors. Movies with big stars or the most foot-tapping music fail as much as those without them.
A movie is what would be called in economics jargon an ‘experience’ good. You cannot know whether it is good or bad without actually consuming it. A producer of a film would therefore want as many first time consumers as possible. Hence the 2000 prints and still counting that are released at the same time. Hence the tie-ins with other businesses that already have a large clientele such as stars of a new film showing up on reality shows on television with high TRPs. (It is a win-win situation – the TV channel maintains people’s interest in the show and therefore its TRPs and the movie-makers have a large captive audience for promotional purposes). A large initial audience can have the added benefit of a larger pool of people talking about it to others. If the audience is small to begin with, the film-maker can try to start an epidemic – by visiting theaters when their film is playing and exhorting the people present at the screening to tell their friends, families, enemies and pets to do the same or getting hold of mailing lists and sending out promotional messages. The cheapest is e-mail, of course. (Making a film is becoming costlier and so producers are finding new pathways to greater revenue generation such as promotional accessories and in-film product placement).
For those of you who still believe that the holy grail of a sure-fire formula for a hit film really does exist out there, you may not be all that wrong. To know what it is, you will have to wait for my next post.
Anurag Kashyap
Abhay Deol
Dibakar Banerjee
Hansal Mehta
Khalid Mohamed
Kundan Shah
Anish Kuruvilla
Jaideep Verma
Manish Gupta
Navdeep Singh
Bhavani Iyer
D. Santosh
Onir
Ashvin Kumar
Ramu Ramanathan
Sudhir Mishra
Pankaj Advani
Revathy
Saurabh Shukla
Shilpa Shukla
Sujoy Ghosh
Suparn Verma
Santosh Sivan
Shashank Ghosh
Shivajee
Pavan Kaul
Partho Sen-Gupta
Prroshant Naryannan
Sam Langoria
Satish Kasetty
A very interesting and intelligent post… thanks and can’t wait for the next chapter…
A very interesting and intelligent post
To phir maine kya kaha tha..?
i didnt seen film little terorist . but i think that was anice move where briliant outlook by asvin kumar . thanks asvin kumar
My God, you almost sound like Steven Levitt!
Sangeeta
An ‘economist’ should also make movies!
Suman Ghosh who did e-con from Cornell, made Podokkhep [ Footsteps ] with Soumitro and Nandita. Previously he made an award winning docu on Amartya Sen.
He teaches Economics in Florida.
K-3
Sangeeta Goyal…Just like you, there was a guy just a couple of years back who tried to speak the same hocus pocus…He was a great economist called Arindam Chowdhuri. He said we are bringing a revolution in Indian Film Industry by analyzing the perfect way to make a film…He said there is no process at present (LOL) and also said that he has found the formula….He analyzed all the data of Indian films, why they ran, how they ran, how many prints, all the bullshit!
They did surveys, market research to find out what themes youngsters like…They had thousands of hours of “intelligent” script sessions! He put all his marketing “logo ko C banana” gyan into this project….And finally…as you said…he found the holy grail!! He produced one of the most path breaking movies in Indian cinema called “Rok Sako toh Rok Lo”!!!!
Oyee…Mujhe lagta hain hum log baate bandh karke picturey banana chahiye…
Kabhi Kabhi Superstaro ke picturey bhi flop hoti hain 2000 prints nikaal ke bhi…
The analogy of a large first time audience Vs. spreading an epidemic can be best seen in comparing the success of Hum Aapke Hain Kaun and some of the recent hits (Dhoom 2, Shivaji in Tamil etc.).
HAHK is possibly the best example of an epidemic and was released with fewer than 100 prints I guess. That film might have bombed had it been released with 2000 prints possiblY – who knows.
And I am sure KANK wouldn’t have made 1/10th of its money had it been released with 100 prints.
THE GOD never thought of making films coz he too didn’t have a sure fire formula for a hit film. But its a sure fire way to get eyeballs for the next post. Keep it up.
Great article!!