20. DOES WORD OF MOUTH REALLY AFFECT BOX OFFICE PERFORMANCE?

Word-of-mouth is a nice buzz expression. But you should be careful when and how you use it. Companies like Cinemascore have spent the last couple of decades gauging viewers’ responsiveness to movies as they leave the theater. It is common perception that if a movie gets an A+ score is likely to have a good run due to positive word-of-mouth. If it gets an F (like Brad Pitt’s recent “Killing Them Softly”) – they are expected to crash and burn very quickly after the first week.

BUT that’s not always true.

Rotten Tomatoes’ thousands of users’ scores (which are different from their critics’ scores) can be used as a gauge of word-of-mouth: if I gave a movie a bad score, I will probably tell all my friends that I didn’t like it. So let’s compare that to box office performance after the first week in theaters – aka “box office decay over time”.

If we look at the top 90 box office films of 2012, we see somewhat of a correlation between Rotten Tomatoes users’ scores (not critics) and box office decay over time: R-squared = 0.25 – fairly weak, but still there (wait for it…)

But here’s the punch:

When you look only at the top 30 performers at the box-office in 2012, that correlation drops to almost zero:

The situation is similar for the next 30 films:

But then, when you look at the films ranked 60-90 at the box office in 2012, that correlation shoots up – R-squared = 0.5 ! A higher score correlates to more money made after the first week (=smaller decay over time):

What this means:

This means that the mega blockbusters are controlled by their marketing, or by the power of the franchise or by whatever – but not by what your friends tell you about the movie. Think about it – how many people told you not to watch “Ice Age: Continental Drift” and yet – you watched it anyway? That movie got a user score of 63, implying people are not saying good things about this movie, and yet – it made 81% of its total grosses after the first weekend – a very low box office decay over time.

On the other side are the more modest movies – those that bring in $30M-$50M. Those movies’ performance after the first week is much more sensitive to word-of-mouth. And that makes sense: when you don’t have a gigantic brain-washing budget, you have to actually make good products.

The bottom line: We watch mega blockbuster “event” films because we have to – it’s primarily a social obligation and only then an emotional entertainment experience. And then we watch smaller films in order to satisfy our personal need for quality entertainment. In other words: we watch Spider-Man because we have to, and the fact that it is good or not will not change our actions. But we watch Lawless primarily because someone we trust told us it is good.

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