Tuesday, January 22, 2013

Planning for Best Picture

February 25, 2013
The Academy Awards were yesterday evening. As an update to the original posting, I would like to share this article from the Wall Street Journal on quantitatively predicting Oscar winners:

Bialik, Carl. "And the Oscar-Pool Winners Are... the Stats Dudes." February 23, 2013, http://online.wsj.com/article/SB10001424127887324503204578318682787064790.html 

The thread tying together this week’s readings was the concept of designing a product and a supply chain modeled after the known or predicted demand of the consumer. Gordon Murray made a small, smart, green car designed for city-living. Ingvar Kamprad designed a store that allowed shoppers to plan and furnish their homes inexpensively, but with quality products. Tata Motors created a car that costs only $2,500 – the least expensive in the world. These companies and innovators have come up with a way to bring consumers exactly what they want, whether it is by filling a void and supplying inexpensive cars to rural locations or by designing an aesthetically pleasing (albeit, at times, convoluted) floor plan where customers feel like they are already at home.

While it may not be planning against natural disasters or bringing a much-needed technology to hard-to-reach populations, at this time of the year with the Golden Globes and the Academy Awards, predicting demand and planning supply chains is necessary to decision-making regarding film distribution and release.  Of the many films that receive positive reviews and even of the many that receive award nominations, decisions must be made on which movies to release in theatres, to re-release in theatres, and to extend run-time past “Oscar season.” At this critical time, the industry must guess which movies people will want to see, anticipate which will dominate at the awards ceremonies, and then supply these films to the public almost immediately in order to capitalize on profit and reach the largest audience.

Netflix and live streaming has made movie rentals increasingly less complicated while buying films has waned in popularity. Seeing films in the theatre, however, remains exciting. It is an experience and a cultural pastime. However, it is only an experience within a select period of time – when the movie is gaining popularity and buzz, when the movie has won Best Picture or another prestigious award, and most importantly, when the movie is actually offered in theatres. Otherwise, for the most part, the movie will not generate interest, general audiences will not fill the theatre, and the studio will not make a profit. Therefore, there is a lot of prediction at work within this supply chain in order to ensure the product reaches the consumer at the right time to take advantage of the film’s natural momentum. 

How will these supply chain decisions manifest themselves? Well, they already have. More theatres and larger theatres are atypically showing independent films such as “Beasts of the Southern Wild” purely because of its Oscar nominations. “Lincoln” – which debuted in early November – has continued its unusually long run in theatres as a result of receiving 12 Academy Award nominations. Noting these types of patterns raises more questions. Will more popular theatres begin to play independent films and, if so, which movies? Will films like “Argo” and “Life of Pi” be more widely re-released? In how many theatres and with how many show times? What will happen on the day after the Academy Awards if the underdog “Amour” comes out on top? These actions and decisions require calculation of demand and careful planning of supply.  

For this reason, some have taken to data analysis by using the number of nominations as a leading indicator to predicting the winner of Best Picture [1].  The winner of Best Picture will guarantee continued and increased demand of the film in theatres. Others use the evaluations and ratings of critics, some of whom predict successful films far in advance of these award ceremonies. These predictions and assumptions make it all the more interesting to see how theatres and the movie industry adapt and respond to reviews, nominations, and award wins when supplying films to large audiences. 

Questions to consider:
  1. How could the movie industry even further capitalize on profits by predicting demand patterns and customer preferences? 
  2. The advent of video-on-demand, digital distribution, and other outlets such as Netflix and Redbox has fundamentally changed the landscape of the movie industry. How do you think these changes – combined with the use of more sophisticated data to track demand preferences – will dictate the release, re-release, and duration of certain films in theatres? 
  3. What movie do you predict will win Best Picture at the Academy Awards?

Related reading: 

Infoysys. “DVD Supply Chain: The Emerging Challenge to Media Profitability.” http://www.infosys.com/industries/media-entertainment/white-papers/Documents/DVD-supply-chain.pdf.

The New York Times. “Fox to Offer Digital Movies Closer to Theatrical Release.” http://www.nytimes.com/2012/09/07/business/media/fox-to-offer-digital-movies-closer-to-theater-release.html?_r=2&.

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