How to Evaluate Box office

Why evaluate box office become such a difficult thing

It seems that box office for a movie is the easiest thing to predict, everyone one can hazard a prediction on a movie`s box office based on genre, story, director and actors. I would say for most of the time, people can have a good guest, the prediction is not that beyond the real result. But for us, experience professionals in film business, we always make the wrong estimate and thus a series wrong decision on greenlighting, marketing blitz and distribution campaign, seriously speaking.

Here comes a solid example for how comes the bad group decision.

The crossing, is an epic movie (a story about World War II in China) by John Woo, who once was the most prestigious director in China and directed several Hollywood blockbusters, such as Mission Impossible 2 and Face off. In this case, we make a series of mistakes from financing to marketing. This movie has a budget more than 30 million dollars, more than 8 Asian super stars participated and was one of the most expected movie in 2014. We slate financing this movie and have evaluate this box office to be 150 million US dollars, because of genre, director and movie star.

To look back, I can say everyone in the company can intuitively tell none of the decisions were right or even ridiculous, but it just happened. After a whole bunch of people spend more than three weeks’ discussion, everything seems intentionally go wrong.

Using the knowledge we learn, we can find several evidence of cognitive bias to decision making:

Overconfidence bias:

We failed to fairly and rationally evaluate the film project and bought out the distribution right with an unfair price. Even we clearly known that John Woo`s last movie the Cliff went through the exact same thing, telling a too complicated story and dividing one movie into two sequels and looming crisis in box office. We still were confidence the Crossing can have good performance by our marketing and distribution arm. We didn`t even watch the final cut and made such a lethal decision.

Confirmation bias:

Even though after several consumer surveys, the data showed that this kind of epic might not attract young audience, we tended to find evidence that younger group should be our target audience, maybe because we were too familiar with young audiences based on our experience or if we want to breakeven, we must focus on young movie goers, anyway, we were just mistakenly persistent on the wrong target audience. (How foolish!!)

Anchoring bias:

Consider the cost and breakeven points for the project, we made a wrong estimation because of the anchoring effect, we do all the estimation around the breakeven points, never thought about the actual number could be far below.