Little Correlation Between Box Office and Film Quality

[Added later: this post was prophetic. The Blade Runner sequel (2049) came out two weeks later and as I'm adding this comment, has been out for a few days. There couldn't be a better illustration of this principle. Reviews from critics and moviegoers alike are extremely positive (including my own here - major spoilers) yet it's underperforming even its modest first-weekend projections. Whether or not word of mouth will increase revenues, it's certainly following in the footsteps of its predecessor, a classic which was initially written off as a box office failure. Movie studio stocks have plummeted as investors realized: even if you make a movie this good, in this day and age, you can't make back your initial investment, and maybe movies are dead as a commercial project, especially relative to video games (see end of linked post).]

I'd been wanting to do an analysis like this for some time. Fortunately a professional (Yves Bergquust at USC) has beaten me to it. It's worth reading the whole article because it's loaded with quantitative analysis of the American film industry, but the upshot for our purpose is that there is no correlation between quality (Rotten Tomatoes rating) and box office.

This reinforces the studios' disinterest, judging by their output and stated explicitly when they're speaking honestly, in making "critically-acclaimed award bait." As with most entertainment, Hollywood doesn't know much about what results in success, but they DO know that spending effort or money on making a good movie has no connection to financial success. Given the medium, that's critically important. A failed experimental painting or short story wastes a few days and dollars of a single person's resources. But movies are intense, multi-million dollar temporary startups. You MUST consider ROI.

To that end, I was also interested to see if budget or ROI are related to quality, and it turns out they are - but of course based on the non-relationship discussed above, that doesn't mean big budget equals big box office. And, bad news for Hollywood, what budget-box office relationship DOES exist is getting weaker over time - which is disastrous, because that means they can't predict ROI anymore.

I'd also like to see if total take (not just box office, also including back-end, ie video) has any better relationship to quality. Cult films that develop a following long after they leave theaters suggest that if there is a profit-quality signal, it would be more likely to emerge using the total take. I would also assume that as distribution channels have multiplied, that box office is less important as a fraction and predictor of overall revenue.