Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The Power of Stars: Do Star Actors Drive the Success of Movies?

The Power of Stars: Do Star Actors Drive the Success of Movies? Is the involvement of stars critical to the success of motion pictures? Film studios, which regularly pay multimillion-dollar fees to stars, seem to be driven by that belief. This article sheds light on the returns on this investment using an event study that considers the impact of more than 1200 casting announcements on trading behavior in a simulated and real stock market setting. The author finds evidence that the involvement of stars affects movies' expected theatrical revenues and provides insight into the magnitude of this effect. For example, the estimates suggest that, on average, stars are worth approximately $3 million in theatrical revenues. In a cross-sectional analysis grounded in the literature on group dynamics, the author also examines the determinants of the magnitude of stars' impact on expected revenues. Among other things, the author shows that the stronger a cast already is, the greater is the impact of a newly recruited star with a track record of box office successes or with a strong artistic reputation. Finally, in an extension to the study, the author does not find that the involvement of stars in movies increases the valuation of film companies that release the movies, thus providing insufficient grounds to conclude that stars add more value than they capture. The author discusses implications for managers in the motion picture industry. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Marketing SAGE

The Power of Stars: Do Star Actors Drive the Success of Movies?

Journal of Marketing , Volume 71 (4): 19 – Oct 1, 2007

Loading next page...
 
/lp/sage/the-power-of-stars-do-star-actors-drive-the-success-of-movies-fEojHvorjR

References (75)

Publisher
SAGE
Copyright
© 2007 American Marketing Association
ISSN
0022-2429
eISSN
1547-7185
DOI
10.1509/jmkg.71.4.102
Publisher site
See Article on Publisher Site

Abstract

Is the involvement of stars critical to the success of motion pictures? Film studios, which regularly pay multimillion-dollar fees to stars, seem to be driven by that belief. This article sheds light on the returns on this investment using an event study that considers the impact of more than 1200 casting announcements on trading behavior in a simulated and real stock market setting. The author finds evidence that the involvement of stars affects movies' expected theatrical revenues and provides insight into the magnitude of this effect. For example, the estimates suggest that, on average, stars are worth approximately $3 million in theatrical revenues. In a cross-sectional analysis grounded in the literature on group dynamics, the author also examines the determinants of the magnitude of stars' impact on expected revenues. Among other things, the author shows that the stronger a cast already is, the greater is the impact of a newly recruited star with a track record of box office successes or with a strong artistic reputation. Finally, in an extension to the study, the author does not find that the involvement of stars in movies increases the valuation of film companies that release the movies, thus providing insufficient grounds to conclude that stars add more value than they capture. The author discusses implications for managers in the motion picture industry.

Journal

Journal of MarketingSAGE

Published: Oct 1, 2007

There are no references for this article.