I’ll Make What She’s Making: Herd Behavior in Hollywood

Abstract

Movie studios have been often criticized for lacking originality in their choice of films, and for the subjective nature of their decision-making process. This paper seeks to test whether Hollywood studios do exhibit “copycat” tendencies in selecting films for production, specifically with respect to mimicking the types of films that have worked in recent years. Secondly, it evaluates whether the decision to do so is efficient. I find evidence that the studios do base production decisions on recent performance, and that the decision to do so is relatively efficient. This suggests that the observed imitation of past successes is not indicative of herd behavior, but of an intentional strategy of studios. The first section begins with an overview of the short history of analytics in Hollywood; the second reviews the available economic literature on the motion picture industry; the third introduces the “herding hypothesis” of studio behavior; the fourth summarizes the data; the fifth puts forth a model of consumer demand for films and presents the methodology for the aforementioned tests; the sixth presents the results; and the seventh discusses possible implications of these results and considers some limitations and avenues for future study.