Box Office Success: Rethinking Economic Measures Beyond Numbers

Batman v Superman: Dawn of Justice smothers a potentially powerful story -- and some of America's most iconic superheroes -- in a grim whirlwind of effects-driven action

- Rotten Tomatoes Critics Consensus

Before the release of James Wan's Aquaman, Batman V Superman: Dawn of Justice reigned supreme as DC Extended Universe's highest grossing film, generating almost US$900 million dollars. This includes blockbusters such as Wonder Woman and Man of Steel. In relative terms, it does mean that Batman V Superman is one of DCEU's most successful films. But, exactly, on what terms?

The example above shows the problem that we face while discussing the film industry, which is box office success. As we know it, box office is the revenue generated by ticket sales. Box office is commonly regarded as a parameter of a film's success for two reasons. For one thing, it shows how popular a film is. Second, it may technically imply that the film is a "success," since large gross sales imply a high profit potential. 

Hence why, motion picture companies like Disney and Warner Bros have the tendency to compete for the highest-grossing films, as though this is the be-all-end-all criteria that can be used to assess a film's relative success.

But while it may be a good and simple parameter to use, it doesn't reflect the true quality of the film. That is, at least from the perspective of moviegoers. For the major studios? Simply pursuing high income is not necessarily a positive thing for them, as well. In this article, we will mainly discuss how fundamental quantitative measures are not representative of a film's success, and why qualitative measures are better. Then, we will also give a real economic example of quantitative versus qualitative metrics.

The Flawed Measure of "Film Success" 

Figure 1: 'Avengers: Endgame' breaks 144 box office records in $1.2 billion opening weekend, Source: uk.movies.yahoo.com

The use of gross box office as a metric for film success is prevalent. The studios use it, the media utilizes it, and even regular moviegoers embrace it. So how is box office accumulated? The box office sales at theaters are recorded by the media measurement and analytic organization Rentrak. Each ticket sold and money collected at theaters throughout the world is recorded immediately to Rentrak and entered into a database. 

In simple terms, gross box office is the product of the number of tickets sold multiplied by the price per ticket. This metric can be classified as quantitative data, as it refers to information that can be quantified, counted or measured, and given a numerical value. However, this quantitative measure comes with a few problems. For one, the gross box office metric does not reflect real income. In economics, we study the real and nominal values of money. The standard technique of calculating box office with the relative price at the time a film is released is inherently flawed.

For example, Avengers: Endgame has dethroned Titanic as the second highest grossing film. However, that comparison does not account for the difference in real value of dollar. Avengers: Endgame was released 22 years after Titanic. US$1 in 1997 is equivalent in purchasing power to about US$1.59 in 2019, an increase of US$0.59 over 22 years. When adjusted with real value, Titanic beats Avengers: Endgame by US$500 million, relative to the price level in 1997. 

So, if ticket prices vary from time to time and from theater to theater, why measure movie success in terms of money? The probable reason why major studios still use nominal incomes is because they can be used to appeal to the broader audience. Regular viewers, like us, don't give much thought to the figures. This is part of the marketing strategy used by studios to induce the average viewer to assume that a film is both popular and good. A strategy that focuses on how marketing influences consumer behavior and how a trend may influence individuals to do things.

There is an alternate quantitative method that calculates the number of dollars spent by the studio to sell one ticket. This measure is quantified by dividing the production cost of the film by the number of tickets sold. Why would a major studio not want to utilize this parameter? Dollars spent per ticket sold is a little difficult for the average viewer to grasp. Regular viewers, once again, seem uninterested in delving into the numbers. Instead, they simply want to be satisfied with the film they are about to watch.

The Better Measure for Audiences

Figure 2: Batman V Superman: Dawn of Justice, Source: rottentomatoes.com

It's not about how popular a film is, which can be influenced by factors like starpower, iconic characters, or even genre; it's about how many people who went to see the film actually enjoyed it. The emotional responses that a movie evokes are often represented in the form of critic reviews and audience ratings. Reviews and audience scores can be tracked from credible movie review sites such as Rotten Tomatoes. 

These reviews utilize some sort of scoring metric in the end. However, they are still categorized as qualitative data since they are based on descriptive values rather than numerical numbers. Review sites, such as Rotten Tomatoes, use rigorous methods, which is an approach similar to research data collecting. They gathered the opinions of a few hundred critics who have met a series of criteria set by Rotten Tomatoes for the review of every film.

This provides the viewers with high-quality remarks that they may use to affirm the quality and success of a film. However, it appears that not everyone agrees with the critics' assessments. That is to say, reviews are very subjective, and they are dependent on characteristics that are neither intangible nor constant, as are most economic variables.

Let's take a peek at Zack Snyder's blockbuster Batman V Superman: Dawn of Justice, one of the most popular modern films that has sparked disagreement among critics and fans. The movie got a rating of just 29 percent on review aggregate site Rotten Tomatoes. But this film appears to be so divisive that practically the whole DC fanbase argued against these critics. The audience score was 63 percent, with over 100.000 individuals evaluating it, which is rather low for a blockbuster film and demonstrates how qualitative metrics like this are prone to subjectivity.

But what if subjectivity is the key to determining cinematic success? Film is an art form, hence the criteria by which we determine film success should be more precisely expressed in subjective terms. In economic principles, you can't quantify the viewer's utility by using income figures that are affected by non-relevant variables such as the actor or actress' popularity.

Looking just at people's reviews is better than looking solely at gross box office. The crucial point here is that if the majority of people think a film is good, it already reflects the most relevant variable, which is people's honest criticism of a film. Consider the difference between Thor: Ragnarok and Batman v Superman. Thor: Ragnarok grossed US$854 million, falling shy of Batman V Superman's US$872. 

Thor: Ragnarok, on the other hand, has a 93 percent critic rating and an 87 percent audience rating on Rotten Tomatoes, compared to Batman V Superman's 29 percent and 63 percent, respectively. So, even while Batman V Superman outperforms Thor: Ragnarok in terms of total revenue and viewers, the average audience enjoyed and loved Thor Ragnarok much more.

What About the Perspectives of Major Studios? 

Figure 3: The Definitive Story of How Marvel Studios Created the Marvel Cinematic Universe, Source: marvel.com

There is a common assumption that if one can make money by spending it, then one must be able to make more by spending more. Studios have frequently attempted to accomplish this, such as by employing more famous actors and directors. But in reality, gathering the highest paid actors and spending big money does not always guarantee success at the box-office. 

The hype is there, but the expectation to perform is even higher. When movies flop, you have examples like the DCEU, where after Batman V Superman polarized audiences, the next blockbuster they released (Justice League) was an even bigger bomb. On the other side, while famous actors and actresses may attract larger audiences, the expense of recruiting those stars tends to cancel out any additional profit that may be gained (Topf, 2010). 

So rather than seeking popularity through increased budgeting, studios should simply focus on choosing the suitable actors. With this shift in focus, the films might have a higher probability of being organically better, as well as potentially receiving better audience and reviewer evaluations. This has a significant impact, since one good film may truly change a person's preference. That is to say that a die-hard fan's behavior, particularly in the film business, may be persuaded that results in brand loyalty and a more sustainable cinematic success.

The Case of GDP and Life Quality

When you look at the bigger picture, this quantitative versus qualitative measure spans in real economic dimensions. GDP is one of the most accurate illustrations of this. GDP, or gross domestic product, is the standard measure of the value added created through the production of goods and services in a country during a certain period (OECD). 

Modern economies and politicians have utilized the "high growth equals high welfare" narrative to sway public opinion. This is strikingly similar to how gross box office is reported, since they employed pure quantitative data to try to explain a performance indicator. However, the issue with GDP, like gross box office, is that it does not take into account the true opinions of people who live in the real world. 

GDP ignores aspects such as happiness levels and satisfaction indexes, which cannot be calculated yet are a significant component of welfare and well-being. It is critical to recognize GDP's limitations and widen our concept of well-being to encompass a society's quality of life. In the context of this article, it is intended that readers would see the flawed metric of gross box office and begin rethinking our measure of success with quality over quantity.

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Unix Bryan Sadikin | Economics 2021 | Staff of Kanopi FEB UI Studies Division 2021/2022

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