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Publications
Publications
  • October 2007
  • Journal Article
  • Journal of Marketing

The Power of Stars: Do Star Actors Drive the Success of Movies?

By: Anita Elberse
  • Format:Print
  • | Pages:19
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Abstract

Is the involvement of star actors critical to the success of motion pictures? Film studios, which they regularly pay multimillion-dollar fees to star actors, seem driven by that belief. I shed light on the returns on this investment using an event study that considers the impact of over 1,200 casting announcements on trading behavior in a simulated and real stock market setting. I find evidence that the involvement of stars impacts movies' expected theatrical revenues, and I provide insight into the magnitude of that effect. For instance, my estimates suggest that, on average, stars are worth about $3 million in theatrical revenues. In a cross-sectional analysis grounded in the literature on group dynamics, I also examine the determinants of the magnitude of stars' impact on expected revenues: among other things, I show that the stronger a cast already is, the greater is the impact of a newly recruited star with a track record of box office successes or with a strong artistic reputation. Finally, in an extension to the study, I do not find that the involvement of stars in movies increases the valuation of film companies that release those movies, thus providing insufficient grounds to conclude that stars add more value than they capture. I discuss implications for managers in the motion picture industry.

Keywords

Talent And Talent Management; Film Entertainment; Investment Return; Revenue; Compensation And Benefits; Resource Allocation; Success; Motion Pictures And Video Industry

Citation

Elberse, Anita. "The Power of Stars: Do Star Actors Drive the Success of Movies?" Journal of Marketing 71, no. 4 (October 2007): 102–120. (Featured in HBS Working Knowledge.)
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About The Author

Anita Elberse

Marketing
→More Publications

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More from the Author
  • Chip and Joanna Gaines' Magnolia Network By: Anita Elberse and Julia McNicholas
  • Paris Saint-Germain: Building One of the World's Top Sports Brands By: Anita Elberse and David Moreno Vicente
  • Live Nation and Pharrell Williams By: Anita Elberse and Kate Christensen
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