THE DETERMINANTS OF BOX OFFICE REVENUE FOR MOVIE SEQUELS
This paper examines the domestic box office revenue determinants of movies that include a series of sequel films that create a franchise. The sample consists of 225 movies released during 1976 2014 as a parent or sequel film as part of a franchise. Regression results indicate the primary determinants of box office revenue for films that are part of a movie franchise are genre, numeric order in a series of movies, receiving a restricted rating, critical acclaim, Oscar award nominations, and production budget. One of the more interesting results includes the observation that science fiction, action, comedy, and family movie genres have a positive and statistically significant impact on box office revenue but the horror movie genre is not statistically significant. The empirical results imply a 10% increase in positive critical ratings augments box office revenue by $11.89 million, while an Oscar nomination is worth approximately $35 million in box office revenue. Holding other factors constant, production budget returns 26 cents per dollar of expenditure but the marginal return of continuing a franchise decreases box office revenue by $9.2 million per successive film in a franchise. One of the more interesting observations is that the horror, action, and comedy genres have negative and statistically significant relationship between numeric order in a series of movies and domestic box office revenue, indicating studios tend to push the storyline in those genres to the point of satiation. In contrast, studios like Disney and Universal appear to be strategic with a franchise brand as movies for children have a positive and statistical significant relationship between numeric order and box office performance. JEL Classification: L82