Theatrical Feature Film Trade in the United States, Europe, and Japan Since the 1950s: An Empirical Study of the Home Market Effect

Abstract

This article reviews the test of a home market model of international trade in media products using a movie industry database covering 6 major countries (the United States, Japan, Germany, Italy, France, and the United Kingdom) over the 1950 to 2003 period. In support of the model, this study finds a consistently positive relation between domestic theater box-office market shares and various measures of domestic movie spending or domestic movie attendance, and negative relations between domestic movie spending and the market shares of imported American film products. Based on these results, declining domestic film production industries in Europe and Japan after about the 1970s, along with growing dominance of the world film market by the United States, is attributed to a relatively rapid growth of domestic consumer spending on movies in the United States.

ACKNOWLEDGMENTS

We are grateful to participants in the TPRC Conference on Communication, Information, and Internet Policy and in seminars at Indiana University and Northwestern University for comments. We are especially indebted to Krishna P. Jayakar and Weiting Lu, who made valuable contributions to the compilation and analysis of a preliminary database for this study.

Notes

For a survey of these explanations with more complete references, see Waterman (2005).

Quality is defined in entirely economic, not aesthetic, terms.

For detailed documentation of the sources and methods by which we assembled the time-series data for box-office market shares, consumer spending, and related data for the six countries included in this study, see Appendix F of Waterman (2005).

These U.S. market share results are also reported in Appendix G of Waterman (2005).

Although systematic earlier data are not available, statistics published in Variety and reported by Guback (1969) suggest that the market shares of foreign films in the United States were substantially higher in the 1958 through 1964 period than after 1980. See also Waterman (2005), Appendix F, for a discussion.

The U.S. market share data are available from the authors.

^aWeighted average of France, Germany, United Kingdom, and Italy.

^bWeighted average of France, Germany, United Kingdom, Italy, and Japan.

Results for Models 6 through 10 reported in this article (Table 5) are reproduced from Waterman (2005), Appendix G (co-authored with Sang-Woo Lee).

In tests of Models 1 and 2, -year up to 5-year lags on the spending variables resulted in positive and significant coefficients in all cases, but the effects were slightly larger and more significant for the 1-year lags.

^aDependent variable: DOMBOXSHARE.

^bThe F statistics for testing the joint significance of the country effects.

∗ p < .1

∗∗ p < .05

∗∗∗ p < .01.

^aDependent variable: USBOXSHARE.

^bThe F statistics for testing the joint significance of the country effects.

∗p < .05

∗∗ p < .01.