Tuesday, May 30, 2006

Movie Critics and Signaling

The NY Times has an article on the declining practice of films being screened for critics before being released to the public. According to the article (and the AP), there have been 12 major releases in the first three months of the year that bypassed critics before being released in theaters, and three of them went on to be the #1 film at the box office in the first week of release. (The three are "When a Stranger Calls," "Underworld: Evolution" and Tyler Perry's "Madea's Family Reunion.") And since that time, "Silent Hill" has reached #1 in its first week, agian without the benefit (cost?) of being reviewed by critics beforehand.

There is an interesting relationship here. Generally, economic signaling models would tell us that consumers should infer that a movie that opts out of a (standard) reviewing process is doing so to escape bad reviews, because the filmmakers know that it is going to get negative reviews (i.e. it is a "bad" film). If it was a "good" film and was thus going to get good reviews, they would let it be reviewed and get the benefits of that. Thus, only bad films would avoid reviews. As a parallel to the standard economic signalling example, what would you think about a used car you were thinking of purchasing if the seller wouldn't let someone examine the engine? That's what's going on here.

However, despite this, some of these films are going on to be very successful at the box office (at least in the first week, which is increasingly the only thing that matters to the studios). So what's going on? Looking at the films that have been successful despite signaling that they are "bad" films, my instinct is that this is precisely the move they are looking for. The audiences for these films are likely to be made up largely of consumers whose tastes are negatively correlated with the tastes of film critics, so by bypassing the NY Times review (and others like it), the film makers are precisely signalling that critics won't like this (but you will) and instead are focusing on using word-of-mouth and TV advertising to reach out to their intending audience. And they do this without the cost of screening films for critics, and by postponing the negative reviews until after the opening weekend returns are in.

Since studio executives greenlighting their projects are likely to base their opinions of the film makers both on reviews and performance (although ultimately caring only about performance), there's a clear benefit to getting good performances to them before the negative reviews do. That way, you avoid a week where your studio head thinks you've created a bomb, before having performance data to demonstrate that that is not the case. Instead, you have the #1 box office ranking in hand, and the negative reviews are never considered.
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6 Comments:

Anonymous dave said...

This analysis seems sensible to me. However, among the movies that mainstream critics dislike, there are at least two types: (1) the set of movies that are bad to sophisticated critics but which lots of people enjoy (White Chicks) and (2) movies that are just bad and essentially nobody likes (Glitter).

Your hypothesis relies on the assumption that most critics dismiss both types 1 and 2 as "bad." I think that's true, but I'm not sure why: one would think there would be plenty of room in the critical market for those who can help people separate (1) from (2). And if people paid attention to those kinds of critics, then the type 1 movies would still have an incentive to screen for critics.

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