Via Brad DeLong, a piece in the LA Times that covers some of the ground I cover about movies in Chapter 9, although the LA Times has better stories. Here are a few excerpts, but it's worth reading the whole thing:
That no one can know whether a film will hit or miss has been an uncomfortable suspicion in Hollywood at least since novelist and screenwriter William Goldman enunciated it in his classic 1983 book "Adventures in the Screen Trade." If Goldman is right and a future film's performance is unpredictable, then there is no way studio executives or producers, despite all their swagger, can have a better track record at choosing projects than an ape throwing darts at a dartboard.
That's a bold statement, but these days it is hardly conjecture: With each passing year the unpredictability of film revenue is supported by more and more academic research...
What the research shows is that even the most professionally made films are subject to many unpredictable factors that arise during production and marketing, not to mention the inscrutable taste of the audience. It is these unknowns that obliterate the ability to foretell the box-office future.
But if picking films is like randomly tossing darts, why do some people hit the bull's-eye more often than others? For the same reason that in a group of apes tossing darts, some apes will do better than others. The answer has nothing to do with skill. Even random events occur in clusters and streaks.
Imagine this game: We line up 20,000 moviegoers who, one by one, flip a coin. If the coin lands heads, they see "X-Men"; if the coin lands tails, it's "The Da Vinci Code." Since the coin has an equal chance of coming up either way, you might think that in this experimental box-office war each film should be in the lead about 10,000 times. But the mathematics of randomness says otherwise: The most probable number of lead changes is zero, and it is 88 times more probable that one of the two films will lead through all 20,000 customers than that each film leads 10,000 times. The lesson I teach in my course is that the fairness of the goddess of fortune is expressed not in alternations of the lead but in the symmetry of probabilities: Each film is equally likely to be the one that grabs and keeps the lead.
If the mathematics is counterintuitive, reality is even worse, because a funny thing happens when a random process such as the coin-flipping experiment is actually carried out: The symmetry of fairness is broken and one of the films becomes the winner. Even in situations like this, in which we know there is no "reason" that the coin flips should favor one film over the other, psychologists have shown that the temptation to concoct imagined reasons to account for skewed data and other patterns is often overwhelming.
In science, data are not accepted as meaningful if they're the result of chance alone. People in the film industry are diligent about gathering data, but are far less skilled at understanding what the numbers mean. The fact is, financial success or failure in Hollywood is determined less by anyone's skill to pick hits, or lack thereof, than by the random nature of the universe. The typical patterns of randomness—apparent hot or cold streaks, or the bunching of data into clusters—are routinely misinterpreted and, worse, acted upon as if a new trend had been discovered or a new epiphany achieved. And so, despite a growing body of evidence that box-office revenue follows the laws of chaotic systems, meaning that it is inherently unpredictable, the superstructure of Hollywood's culture—that pervasive worship of who's hot and the shunning of who's not—continues to rest on a foundation of misconception and mirage.
