Risky Business at the Movies

There is a fascinating new study that statistically shows zero correlation between the star power of a box office movie and the film’s profitability.

In other words, just because you hire a big “A Lister” to star in your film, you are not guaranteed any profits.

From the article (which you can read here):

“S. Abraham Ravid, a professor of finance at Rutgers University and a visiting professor at the Wharton School of the University of Pennsylvania, looked at nearly 200 films exhibited between late 1991 and early 1993 and concluded that a film’s star had no impact on the flick’s rate of return.

Nine years and several studies later, he says definitively: “Star participation has no statistical correlation with the success of a movie, no matter how you define ‘a star’ or how you define ‘success.'”

While top-shelf stars like Ferrell and Cage often sell more tickets, he says their movies are often that much more expensive to produce and, as a result, rarely turn a sizable profit for their studios. Put another way, stars do well for themselves and their agent and management teams, but they fail to deliver for the studios that employ them.”

OK, so it makes sense that big stars sometimes flop.  But given the size of their salaries, entourages, agency fees and so on, why would an executive agree to the big payout?

“A-list stars serve as a kind of insurance policy for nervous executives simply looking to maintain their jobs. The way he sees it, if studio heads hire a star like Kidman and the film flops, they can just shrug and say, “Well, who knew?” But if they hire an unknown and the film flops, they’re quickly shown the door with others scoffing, “What were they thinking?””

So if it’s good enough for big studio heads to take out an insurance policy on their career by going for a sure thing, why shouldn’t you?   So go ahead, go purchase that expensive prime time TV spot, back page of Time Magazine, home page road block on Yahoo.  Who could blame you?  Because if those things don’t work, then what else possibly could?

Leadership involves risk taking, and having the conviction and confidence to admit when you’re wrong.   If you want to be a leader, you can’t run with the crowd.

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One Response to “Risky Business at the Movies”

  1. Mark on December 13th, 2008:


    See any names on the list you don’t recognize? I would venture to guess that movies that bring the most profit have the biggest names.

    Whats going on here is people are trying to hit home runs instead of singles.

    A big name might not bring you any more money on average, but studios think about the 5 or 10 great movies with big names, and imagine themselves making something with just as much impact.

    In the marketing world I think the same thing is going on. The prime time spot is one factor that the most profitable marketing plans will share, but that doesn’t negate the fact that the average prime time placement wont be profitable. And if it is, how can you prove it? So then you end up with something that has a questionable amount of awareness impact, and no profitability.

    The problem with always trying to hit home runs: unless you are the likes of Ryan Howard you are going to strike out.