Posted Fri Feb 17, 2012 at 09:00 AM PST by Dick Ward
One film in particular was estimated at three times the actual amount.
It's a strange way of doing business, but box office success or failure is judged on estimates, rather than the actual numbers - at least for the first weekend. The upside to this is, of course, is that results are able to be reported much more quickly than if studios had to wait for the actual tally.
This does lead to a bit of an issue though, when the estimates are as far off as they've been in the last few years. According to a study by the Stanford Graduate School of Business, estimates are off by an average of 7.9% above the actual take. The 2008 movie 'Delgo' was estimated at $568,240 while the actual take was $164,160. 'Extraordinary Measures' was bad too, with an estimated $2.14 million and an actual $1.15 million.
Neil Malhotra, associate professor of political economy at Stanford, says that the current model leads to optimistic estimates. "We also argue that there may be some strategy behind the inflation, [because] inflation is substantially higher in the first weekend of release, when the incentives are greatest to generate positive word-of-mouth."
Source: Home Media Magazine
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