- Yi, Dong Hun [Browse]
- Senior thesis
- 95 pages
- Sannikov, Yuliy [Browse]
- Princeton University. Department of Economics [Browse]
- Class year
- Summary note
- The American film industry has been seeing gradual decline in domestic
box office revenues for the past five years with academic and film industry
professionals claiming that the film industry will ‘implode’ within the near future.
Smaller production studios will be acquired in the cut-throat industry while only
the few top production studios will remain.
This thesis is based off the premise that profit margin is just as good of an
indicator of a film’s success as film revenues are. In this thesis, I explore the
relationship between film profit margins and film production budget, with a variety
of other categorical and binary variables. I will demonstrate through various
empirical models that smaller production budgets can be just as, or more successful
than larger production budgets, in terms of profit margins. In turn, this will
demonstrate that small and medium production studios, that do not have the
financial capital necessary for big production budget movies, can still stay within
the industry by using smaller production budgets. In addition, by formulating a
specific film production method that uses a variety of different categorical and
binary variables, they will be able to achieve higher profit margins.