“Meet Hollywood’s Latest Genius”

http://www.latimes.com/features/printedition/magazine/la-tm-random27jul02,1,1850294,full.story?coll=la-headlines-magazine&ctrack=1&cset=true

In his article, Leonard Mlodinow examines the unpredictability of Hollywood; he explores how much of a studio’s success is due to executives making the business choices and how much of it is random. Recent research has suggested that films, no matter what the budget, are subject to unpredictable factors arising during production and thereafter. Although Hollywood executives tend to disagree with such an assessment, evidence points to the industry following the law of chaotic systems– meaning that it is nearly impossible to foresee whether a movie will generate revenues.

Going on to discuss information cascades, the article becomes quite relevant to our coursework. Emphasizing that studios are unable to create a strategy that gives them any advantage, Arthur De Vany, a retired UC Irvine economics professor, has theorized regarding the effects of a marketing blitz on a movie with a sub-par plot. He asserts that although marketing helps in a movie’s opening weeks, eventually an information cascade takes over. When we hear good reviews from peers and critics, we go (and might then tell others)—and vice-versa. In effect, for a film to have long-term success in the cinema, it needs to create a cascade that will raise our expectations about its quality.

Can we predict a resultant information cascade? While some feel that screening a movie to a focus group will be very indicative about its long-term revenue-producing capabilities, others feel differently. Mlodinow’s article points out how quickly tastes can change—how the plans of studio executives can suddenly go awry from one week to the next.

De Vany notes that studios did a lot better before the 1960’s because it had power over their products’ distribution. Controlling a film’s release pattern, the studio was able to control the information cascade as well. I found such an observation the most intriguing part of the article. At the same time, I am unsure how relevant the information cascade application is itself. I disagree that the opinion of others have an absolute influence on me. There are some movies criticized by many that I just have to see, while there are others that have been widely applauded that I absolutely refuse to sit through. I am sure there are many others like myself who place a high value on private information and opinion and thus disrupt De Vany’s information cascade theory.