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At the Movies: Some Stylized Facts on Investment Returns and Consumption Patterns

Author

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  • Lee Yoong Hon

    (Nottingham University Business School, The University of Nottingham Malaysia Campus, Malaysia)

  • Ruth Lim Sheau Yen

    (School of Social Sciences, Heriot-Watt University, Malaysia)

Abstract

This article examines the impact of a movie's budget on its profitability by measuring movie profitability using its return on investment (ROI). With a dataset comprising 3309 movies, we find that a movie's ROI negatively correlates to its production budget. Our findings further reveal that its ROI is highest in the category of low budget films when compared to other groups of different budget categories, i.e., moderate, big, and mega budget. In terms of an investment portfolio strategy, we argue that the better option for movie studios is to concentrate more on smaller-scale film projects instead of investing heavily in major productions, or at the very least, to consider having a more balanced portfolio in order to realize greater overall returns.

Suggested Citation

  • Lee Yoong Hon & Ruth Lim Sheau Yen, 2018. "At the Movies: Some Stylized Facts on Investment Returns and Consumption Patterns," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 17(2), pages 123-142, September.
    • Handle: RePEc:ijb:journl:v:17:y:2018:i:2:p:123-142
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    References listed on IDEAS

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    Cited by:

    1. Jordi McKenzie, 2023. "The economics of movies (revisited): A survey of recent literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 480-525, April.

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    More about this item

    Keywords

    return on investment; production budget; movie industry; box office; consumption pattern;
    All these keywords.

    JEL classification:

    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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