Seasonality in the Non-U.S. Motion Picture Industry: A Case of South Korea

Abstract

In the international motion picture market, when making strategic decisions about the timing of release, it is important to consider the product's country of origin as well as demand seasonality because of their cultural orientation. However, the fluctuation patterns of underlying demand for international market have not been distinguished from that of U.S. domestic market. Here, we analyze patterns of the decay effect, which represents the diminishing attractiveness of a movie over the product life cycle, and the seasonality of underlying demand for Hollywood and non-U.S. local movies in a non-U.S. market. We find a positive effect of U.S. holidays on the seasonality of underlying demand for Hollywood movies in the non-U.S. movie market, and a negative effect for non-U.S. local movies. The authors also find that the decay effect for Hollywood movies in the non-U.S. market is greater than that for non-U.S. local movies. These findings contribute to our understanding of the effect of country of origin on product life cycle and the seasonality of underlying demand, especially in movie-importing countries where local and Hollywood movies compete.

ACKNOWLEDGMENT

We thank participants at 16th International Conference of the ACEI in Copenhagen and 33rd INFORMS Marketing Science Conference in Houston and fellow researchers in KAIST, especially Young June Sah and Namil Kim, for their valuable comments and suggestions.

Notes

¹ Such as production and marketing budget (Basuroy, Chatterjee, & Ravid, 2003), number of opening screens (Swami, Eliashberg, & Weinberg, 1999), consumer reviews (Liu, 2006; Duan, Gu, & Whinston, 2008), sequel (De Vany & Walls, 1999; Basuroy, Chatterjee, & Ravid, 2003), award and star effect (Wallace, Seigerman, & Holbrook, 1993; Prag & Casavant, 1994; Ravid, 1999; Elberse, 2007; Lee, 2009), genre (Eliashberg & Shugan, 1997), MPAA ratings (Litman, 1983; Sochay, 1994; Basuroy, Chatterjee, & Ravid, 2003), or country of origin (Zhang, Luo, & Yang, 2009).

² The market share of U.S. movies is 41% of the international market of $85.9 billion (Coopers, 2009) and the remaining 59% is from non-U.S. markets.

³ For example, the domestic performance (Neelamegham & Chintagunta, 1999; Walls, 1997; McKenzie, 2009), production budget (Ravid, 1999), and the time lag between release in the United States and in international markets (Elberse & Eliashberg, 2003) have been found to be significant factors in success. These results are corroborated in other later papers, for example, (1999) and Fee (2002). Hennig-Thurau, Walsh, and Bode (2004) also proposed several other factors that differentiate box office success in the U.S. and German markets; these include genre, style, level of symbolism, level of star power, awards won, and certifications.

⁴ KOFIC: http://www.kobis.or.kr; KMDB: http://www.kmdb.or.kr

⁵ The nested logit predicted market share of movie j in week t is given as s_jt = exp(v_ijt/(1 – σ))/(D_t^σ + D_t), where D_t = Σ_kεJt exp(v_ijt/(1 – σ)) and J_t is the set of all available movies to potential moviegoers in week t.

⁶ Week 17 is chosen just for graphical efficiency of Figure 2 and 3. The choice does not affect the interpretation of the results.