Summer might not be best time to roll out blockbusters

loneranger.jpgI know this is crazy thinking, but just because everybody keeps doing something doesn't mean it's the right thing to do. This summer's hot-and-cold box office is a case in point: Too many big releases competing for the same limited audience within the same limited time span, with "Iron Man 2" cleaning up and "The Lone Ranger" taking a dive. It's debatable whether the Johnny Depp retread would have fared much better if it came out in, say, March instead of late June, but at least the economic rationale would have made sense. March, if you recall, is when "The Hunger Games" came out. From NYT economics writer Catherine Rampell:

Why do studios chase an ever-diminishing share of what is only a slightly larger market? It probably has to do with overconfidence. Economists tend to think that companies trade off between larger customer demand and competition, but Hollywood studios behave as if the competition doesn't actually exist. Studios, [Liran Einav, an economist at Stanford University] told me, probably have a systemic tendency to overestimate how well their own films will do relative to competitors'. "When a studio green-lights a big blockbuster movie, they're expecting it to work," said Peter Schlessel, the former president of Columbia Pictures, and currently the chief executive of FilmDistrict, an independent distribution company. "By definition they're not expecting it to not work." To some extent that overconfidence can be wielded strategically. Studios claim release dates years in advance in the hope that their rivals will cede the weekend, a tactic economists call deterring entry. Columbia Pictures, for example, is opening "The Amazing Spider-Man 2" on May 2, 2014. That's followed by "The Amazing Spider-Man 3" on June 10, 2016; and finally "The Amazing Spider-Man 4" on May 4, 2018.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
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