X-Message-Number: 12124
From: "John de Rivaz" <>
Subject: Why one off beat movement is more popular than another
Date: Tue, 13 Jul 1999 16:16:34 +0100

People have debated why one particular movement rather than another is a
success. This may explain why, even though it is about films rather than
books - the principles ought to be the same.

It is taken from Butterfly Economics, by Paul Ormerod. To read more about
this book, please click on:
http://www.amazon.co.uk/exec/obidos/ASIN/0571200419/longevityreport

Living at the Edge of Chaos

(del re an ants nest and two equal piles of food equidistant from it, and
how the pattern of visits to each pile is not 50:50)

An ant coming out of the nest follows one of three possibilities: it visits
the food pile it previously visited; it is persuaded by a returning ant to
visit the other source; or, of its own volition, it decides to try the other
pile itself. And this is almost all that is required to explain the complex
and seemingly baffling phenomenon of the fluctuations in the proportions of
ants visiting the respective piles.

(Del)

When this chapter was first being written, the film Anaconda emerged as an
enormous and completely unexpected box office hit in the United States.
Described by one film critic as 'a movie about huge snakes devouring a
B-grade cast', it nevertheless took $43 million in cinema receipts in the
first three weeks of its release. This is by no means untypical in the film
industry. Indeed, during the process of revising the chapter, the low-budget
British film The Full Monty, featuring as its key characters redundant steel
workers from a depressed, industrial part of Britain, also became a major
American hit. Tremendous successes emerge from nowhere, and films made with
huge budgets, replete with glittering names, can flop. Recent examples of
major commercial failures include Hudson Hawk and The Postman, despite
massive funding and leading stars.

The American economists Arthur De Vany and W. David Wallis published an
article in the Economic Journal in November 1996 using a more complicated
version of the ants model to account for success or failure in the American
cinema. They tested the model by comparing its properties with those of the
weekly data provided by Variety's Top 50 films in America. The principle of
positive feedback operated with devastating effect. During the nine months
which they analysed, the top four films took over 20 per cent of all box
office receipts, and the bottom four less than one hundredth of 1 per cent.
The highest-grossing film had revenue of $49 million, whereas the film
exactly in the middle (defined as the position where the number taking more
than its revenue is the same as the number taking less) took only $300,000.
And the worst performer had a total revenue of under $5,000, representing a
ratio of 10,000:1 in favour of the most successful over the least.

The tremendous uncertainty surrounding the success or failure of a new
release is reflected in the very brief tenure of studio heads. de Vany and
Wallis attempted to contact nearly 400 film executives, but one third of
their letters were simply returned with no forwarding address. A disaster
with a major film can even bankrupt a studio, as happened, for example, with
United Artists and Heaven's Gate.

The key to the whole process is interacting agents. Movie-goers make or
break films by telling their friends, an activity which is reinforced by the
role of reviewers. The ants leave a trail for others to follow, but here the
word is spread through conversation and reading newspapers. In the orthodox
economic theory of consumer behaviour, the tastes and preferences of
individuals are given, and the individual then acts so as to maximise his or
her 'utility' with respect to these tastes. In the film industry; when a new
release is issued, consumers do not know in advance whether they will like
it or loathe it. In conventional theory; the actions of individuals are held
to reveal their true preferences, but here they have to discover what their
preferences really are, which is why the opinions of others influence
individual behaviour to such a high degree.

The multiplicity of choices available to film-goers leads to an even greater
role for the opinions and actions of others in deciding the behaviour of any
individual. In the ants model, there are just two food sources from which to
choose. In the cinema, any one of the Top 50 films is a potential 'source'
to visit. As soon as differences begin to emerge between films, they
compound with great speed, hence the enormous differences in revenues earned
by the most and least successful.

The scope of the available choice is far, far greater than the simple
difference between two and fifty possible destinations. Indeed, for all
practical purposes, in the film context, the dimension is infinitely large.
One person may be a film fanatic, and religiously view every film in the Top
50. At the other extreme, someone else may see none of them. And it is not
just the number of films which an individual sees which counts, but the
order in which they are seen. For it is the experience of going to a film
which spreads the news to others about its value. Seeing a film on the last
day of its release does not have the same potential impact as seeing it on
the first. The possible permutations of the number of films seen and the
order in which they are seen is, even for an individual, gigantic. de Vany
and Wallis point out that in a world of just 1,000 film-goers and fifty
cinemas, the number of possible outcomes is more than 10 followed by 210
zeros.

Enormous uncertainty and hence difficulty of prediction is therefore
inherent in the film industry. Even the existence of major stars and a huge
advertising budget is no guarantee of success. Indeed, the fact that such a
film is released at a large number of cinemas compounds the risk. If the
initial audiences do not take to it, this information will spread very
rapidly; and the studio will be left with a major failure. The uncertainty
of the industry is reflected in its structure. For example, contracts
between studios and distributors are very flexible and adaptive, containing
large numbers of contingency clauses to try to cover the wide range of
possible outcomes.



Sincerely, John de Rivaz
my homepage links to Longevity Report, Fractal Report, my singles club for
people in Cornwall, music, Inventors' report, an autobio and various other
projects:       http://ourworld.compuserve.com/homepages/JohndeR

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