An Empirical Analysis of the Success Factors of Major Feature Film Productions

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Helsinki University of Technology | Diplomityö
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Date

2006

Major/Subject

Yritysstrategia ja kansainvälinen liiketoiminta

Mcode

TU-91

Degree programme

Language

en

Pages

97

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Abstract

Each year, Hollywood studios invest more than US $ 10 billion in feature films. While some of the produced motion pictures become successful, others are only able to recoup their cost, or are even financial failures. This difficulty in predicting the outcome of a movie production is not only due to the creative background of most people involved, but also to the complex nature of movie production. Several studies, recent and past, have explained different factors that can be responsible for the success of a movie. This study analyses how the risk an investor and producer takes when financing a motion picture can be handled and reduced. To do so, this study aims to give an overview of the motion picture production and distribution business, to discuss methods to reduce and to distribute the risk involved in movie production, to identify factors that can be used to predict the success of a movie and to develop and test simple model to explain the success of a movie based on the factors identified before. To reach these goals, the movie investment, production exploitation process is presented. To reduce the risk for the investor, contracting approaches are discussed, as well as the possibilities to forecast the success of the movie picture before the actual investment is made. Based on literature, factors that influence the theatrical success are identified. An integrated model is presented. Using linear regression, multinomial logistic regression and median regression the hypotheses of the model are tested. The results of the regression analysis provide support for wide parts of the hypotheses. The proposed model is found to explain the influences the identified factors have on each other, and therefore provides a deeper understanding of the business. It thereby helps to reduce the uncertainty for the investor, and to enhance the chances of a successful investment.

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Supervisor

Maula, Markku

Thesis advisor

Maula, Markku

Keywords

Media Industry, Motion Pictures, Regression Analysis

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