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WHAT HAS ECONOMY TO DO WITH MOVIES?

10/2/21

Alessia Paperetti

According to which conditions is a film promoted to the public? What are the factors that a manager takes into consideration when deciding the launch date of a new film?

After a film is finished, one of the first problems is deciding when to make it available for the audience. Nowadays, the concern is not only about the date of the launch in the cinemas: distributors also have to consider streaming platforms such as Netflix, the possibility of buying it as a DVD or watching it on TV. Moreover, they have to plan an effective advertising strategy, which primarily consists of trailers, teasers, appearances of the cast on TV shows.

This process is very long and involves many departments of the company, but I will mainly focus on the distribution in cinemas. 

This topic can be seen as a real-life application of the tools of microeconomics, in particular, the very-well known model of demand and supply.

The distribution in cinemas is influenced by both internal and external factors. Internal factors are not intrinsic characteristics of the film, as one may think, rather they are necessary conditions related to timing. Whether the managers can choose the right time to launch the film greatly influences the success or failure of the movie at the box office. Instead, external factors are closely linked to the willingness of the audience to go to the cinema and their willingness to pay for it. 

There are mainly four elements influencing the spectators in the decision of going to the cinema: 

  • National or international events, such as the Olympic Games, 

  • Holidays, such as Christmas or Easter, 

  • Competition with other films,

  • Closely related economic events. 

The first two categories are strictly connected to the fact that when, for example, Olympic games or Super bowl are on television there will be less willingness to go to the cinema, so distributors tend to avoid launching a film close to this kind of event. 

On the other hand, holidays are favorable for the launch of a film: during Christmas, for example, the audience has more free time to spend with family and friends and, consequently, they are more prone to spend their money. A problem closely related to this is competition: given that holidays are an advantageous time, companies want to launch their movies in those periods, so they need to pay attention to their competitors in order not to have two, or more, similar films overlapping. Competition is divided in two subgroups: competition among the same segment of the market, so analogous films; competition between different studios, which want to make the greatest possible profits starting from the box office.

The last category refers to economics elements: since marketing has a persuasive function in terms of willingness to pay, its job is to stimulate the audience to spend on films, for this reason distributors consider the day in which, for example, you receive the salary or the day in which you pay taxes and consequently choose the one that will be more profitable for them.