Entertainment Science Data Analytics and Practical Theory for Movies, Games, Books, and Music

Preface and Acknowledgements
Contents
1 Forget the “Nobody-Knows-Anything” Mantra: It’s Time for Entertainment Science!
	The “Nobody-Knows-Anything” Mantra in Entertainment
	Why Entertainment Science Should Be the New Mantra of the Entertainment Industry
		Avoiding the “Nobody-Knows-Anything” Trap with Data Analytics
		Avoiding the “False-Precision” Trap with Theory
		Understanding (and Overcoming) the Persistent Forces of the “Nobody-Knows-Anything” Mantra
	How This Book is Organized: Entertainment Science as a Cross-Product Approach to Knowledge Generation
	Before We (Really) Get Started: Some Words on the Empirical Methods Employed by Entertainment Science Scholars
		Regression Analysis as the Econometric “Mother” of Entertainment Science Methods
		Some Challenges—and a Quick Glance at Methodological Approaches to Master Them
	Concluding Comments
	References
Part I Products, Markets, & Consumers—The Business and Economics of Entertainment
2 The Fundamentals of Entertainment
	What’s Entertainment?
	Why is Entertainment Important After All?
		Entertainment Generates Substantial Economic Value!
		Entertainment is a Pioneering Industry!
		Entertainment Defines Our (and Your) World!
			Entertainment Shapes Our View of the World (and of Dogs)
			Entertainment Gives Us Language
			Entertainment Provides Us Meaning and Motivation
	Concluding Comments
	References
3 Why Entertainment Products are Unique: Key Characteristics
	Entertainment Products Offer Hedonic Benefits
		The Pleasure Principle
		Holistic Judgment
		Hedonic Does Not Rule Out Utilitarian
		Managerial Consequences of the Hedonic Character
	Entertainment Products Are Prone to Satiation Effects
		Of Utilities and Satiation
		Levels of Satiation in Entertainment
		Managerial Consequences of the Satiation Effect
	Entertainment Products are Cultural Products
		Entertainment Products Express Attitudes and Values
		Entertainment Products Constitute Cultures and Influence Their Choices
		Managerial Consequences of the Cultural Character
	Entertainment Products are Difficult to Judge
		The Experience (and Quasi-Search) Good Character of Entertainment
		Entertainment Choices Depend on Taste
			The Trouble with Taste Judgments
			Do Consumers Have Taste, After All?
			Where Do Differences in Taste Stem From?
		Managerial Consequences of the Difficulty to Judge Entertainment
	Entertainment Products are Creative Products
		The “Art-for-Art’s-Sake” Property of Entertainment
		The “Motley Crew” Property of Entertainment
		The “Infinite Variety” Property of Entertainment
		Managerial Consequences of the Creative Character
	Entertainment Products are Information Goods
		The “First-Copy Cost” Property of Entertainment
		Managerial Consequences of the Information Good Character
	Entertainment Products Have Short Life Cycles
		The “Perishability” Property of Entertainment
		Managerial Consequences of Entertainment’s Short Life Cycles
	Entertainment Products (Potentially) Have Externalities
		The “Two-Sided” Property of Entertainment
		Managerial Consequences of Entertainment Products’ Externalities
	Concluding Comments
	References
4 Why Entertainment Markets Are Unique: Key Characteristics
	The Big Entertainment Picture: Two Sub-Markets Characterized by High Innovation and Partial Concentration
	High Innovation Frequency in Entertainment Markets
	A Tendency Toward Concentration: High Entry Barriers in Entertainment Markets
		Production and Marketing Resources
		Distribution Resources
		Access to and Control of Creatives and Their Works as Resources
		Technological Resources
	Even More Concentration: Network Effects
		Direct Network Effects
		Indirect Network Effects and How They Influence the Success of Entertainment Products
	Managerial Consequences of Entertainment Markets’ Characteristics
	Concluding Comments
	References
5 Creating Value, Making Money: Essential Business Models for Entertainment Products
	A Value Creation Framework for Entertainment
	Who are Those Who Create Entertainment Value and How They Do It: A Snapshot of Players, Products, and Trends
		Major Studios, Labels, and Publishers: The Entertainment Conglomerates
		The Market for Filmed Content: Movies and TV Productions
		The Market for Written Content: Recreational Books
		The Market for Recorded Content: Music
		The Market for Programmed Content: Electronic Games
		The Dynamics of Entertainment: Some Words on Integration and Transformation Processes
	Transforming Value into Money: Approaches for Managing Revenues and Risk
		Generating Revenues from Consumers
			Direct Distribution of Entertainment
			Indirect Distribution of Entertainment
				The Fixed Compensation Model
				The Revenue-Sharing Model
				Mixed Models
		Generating Revenues from Advertisers
			The Blessings (and Dangers) of Brand Placement
				The Economics of Placements
				But, Two Words of Caution
			How to Design In-Product Advertising
		Generating “Revenues” from Third Parties: The Case of Subsidies and Other Public Benefits
		Managing the Risk of Entertainment Products
			On the Riskiness of Entertainment
			Approaches to Manage Risk on the Slate Level
				Balancing Diversification and Expertise
				Balancing Risk and (Expected) Returns
				Be Careful, Outsiders: Some Words on Investing in Entertainment Portfolios
			Approaches to Manage Risk on the Individual Product Level
				Co-Financing of Entertainment
				(Pre-)Sales Deals
				Crowdfunding Entertainment
	Concluding Comments
	References
6 The Consumption Side of Entertainment
	Why We Love to Be Entertained: The Sensations-Familiarity Framework of Entertainment Consumption
		The Specific Motivational Values that Lead Us to Consume Entertainment
		Of Sensations and Familiarity
	The Emotional Facet of Entertainment Consumption
		How Emotions Work
		What Kinds of Emotions Exist?
			A Simple (but Meaningful) Typology of Consumer Emotions
			Looking Forward: Adding a Time Dimension to Our Understanding of Emotions
		Which Emotions Affect Entertainment Decisions—and How?
			General Findings on Emotions in Entertainment
			The Fascination (and Relevance) of Negative Emotions
	The Imagery Facet of Entertainment Consumption
		On Event Models, Images, and Imagery
			Some Imagery Basics
			Types of Entertainment Imagery
			The Drivers of Imagery
		The Power of Imagery: Narrative Transportation, Immersion, and Flow
		Narrative Transportation
			Immersion
			Flow
	A Process Model of Entertainment Consumption
	Concluding Comments
	References
Part II Managing & Marketing Entertainment—What Makes an Entertainment Product a Hit?
	References
7 Entertainment Product Decisions, Episode 1: The Quality of the Entertainment Experience
	Linking (Experience) Quality with Product Success
	What Makes High-Quality (a.k.a. “Great”) Entertainment?
	Getting Closer to the Product’s Core: What Makes a “Great” Storyline?
		Using Analytics and Theory to Understand “Great” Storytelling
		Can Computers Craft “Great” Stories?
	Concluding Comments
	References
8 Entertainment Product Decisions, Episode 2: Search Qualities and Unbranded Signals
	Technology as a Search Attribute in Entertainment
		Technology and the Quality of Games
		Technology and the Quality of Movies
		Technology and the Quality of Books
		Technology and the Quality of Music
	Signals of Quality for Entertainment Products
		Entertainment Genres and Themes
			What, Exactly, is a Genre?
			Are Some Genres More Successful Than Others?
			The More Genres the Merrier?!
			International Differences: Not Everyone Loves Baseball
			Culture is a Dynamic Phenomenon: The Zeitgeist Factor
		Entertainment Ratings and the Controversial Content on Which They Are Based
			Linking Entertainment Ratings with Product Success
			Disentangling the “Appeal Effect” of Radical Content and the “Restriction Effect”
			The Appeal of Radical Content, Contextualized. Or: Nobody Wants to See Sex (in a Galaxy Far, Far Away)
			Finally, a Few Words on Risk and Radicalness
		Entertainment’s Country of Origin
			“Made in Hollywood” as a Quality Signal
			Empirical Findings on How Entertainment’s Country of Origin Influences Success
			Both Sides Matter: Cultural Discount
		The Production Budget
	Concluding Comments
	References
9 Entertainment Product Decisions, Episode 3: Brands as Quality Signals
	The Fundamentals of Entertainment Branding
		What’s in an Entertainment Brand?
		Strategic Options of Entertainment Branding
			A Typology of Brands: The “Entertainment Brandscape”
			Entertainment Branding Strategies
				Brand Integration Strategies
				Brand Alliance Strategies
				Which Branding Strategy Has the Most Potential?
	Brand Elements: What is a Good Brand Name (and Does it Matter Financially)?
	Entertainment Line Extensions: The Case of Sequels and Remakes
		What Sequels and Remakes Have in Common—and What Sets Them Apart
		“Average” Return and Risk Effects for Entertainment Line Extensions
			What Can Entertainment Producers Gain from an “Average” Sequel?
				Some Basic Insights on Sequel Value
				The “Treatment Bias” Problem—and a Solution
			And What Can be Gained from an “Average” Remake?
		A Closer Look at the Factors that Make a Successful Entertainment Line Extension
			Characteristics of the Family (or Parent) Brand
			“Fit” Characteristics
			Characteristics of the Line Extension
			Using Contingency Information to Develop a Return-Risk Portfolio
		The Dynamics of Line Extension Similarity: Of Thresholds that Vary with Time
	Entertainment Category Extensions
		Why Do a Category Extension?
		How Category Extensions Affect Revenues and Risk: Averages and Contingencies
	Stars as Human Entertainment Brands
		How Do Stars Generate Value for Consumers?
			The “Cognitive Route”: Stars are Ingredient Brands
			The “Emotional Route”: Stars are Parasocial Relational Partners
		The Financial Impact of Stars on Product Success
			“Average” Star Power Effects
				Basic Insights on Star Value
				The “Treatment-Bias” Problem Once More
			Contingency Factors for (Movie) Star Power
				Star Characteristics
				Movie Characteristics
				“Fit” Characteristics
			The Effect of Stars on Financial Risk
		When You Wish to be a Star: The Controversial Roles of Talent and Serendipity
			Rosen’s “Talent Argument”
			Adler’s “Chance Argument”
			What Data Analytics Can Tell Us About the Talent Versus Chance Controversy
	Franchise Management: A Holistic Look on Entertainment Brands
		How Thinking in Franchises Shapes the Economic Logic
		When the Extension Affects the Original Brand: Reciprocal Spillover Effects
			Reciprocal Spillover Effects of Line Extensions: The Case of Movie Sequels
			Reciprocal Spillover Effects of Category Extensions: The Case of Book Adaptations
		From Star Wars to Marvel: The Rise of Entertainment Universes
			“A Long Time Ago”: Star Wars as the First Entertainment Franchise
			From Franchises to Mega-Franchises a.k.a. Universes
	What’s an Entertainment Brand Worth? Using Econometric Approaches for Measuring Brand Equity in Entertainment
		Going Beyond Averages and Subsets: On the Valuation of Individual Entertainment Brands
		Valuing the Next Spider-Man Sequel
			Step 1: Estimating Forward Spillover Revenue Effects
			Step 2: Adjusting Results for Risk Effects
			Step 3: Estimating Reciprocal Spillover Effects
	Concluding Comments
	References
10 Entertainment Product Decisions, Episode 4: How to Develop New Successful Entertainment Products
	The Strategic Dimension of Entertainment Innovations
		Artistic Versus Economic Innovation Goals
		The “Right” Degree of Innovativeness
		Make, Cooperate, or Buy?
		Some Threats to Systematic Innovation Management in Entertainment
			The “Artistic Temptation” Threat
			The “Micromanaging of Creatives” Threat
			The “(Perceived) Violation of Artistic Integrity” Threat
			The “Myopia” Threat
	The Cultural Dimension of Entertainment Innovation
		Theme 1: Autonomy and Responsibility
		Theme 2: Adherence to a Shared Core Goal
		Theme 3: Entrepreneurial Orientation
		Theme 4: Peer Culture Built on Candor and Trust
	The Organizational Dimension of Entertainment Innovation
		The “Who” Question: The Importance of Human Resources
			Internal Human Resources
			External Human Resources
		The “How” Question: Creativity Needs Freedom
			Condition 1: (Relatively) Flat Hierarchical Structures
			Condition 2: Leave Room for Failure in the Early Phase of the Innovation Process (Only)
			Condition 3: Avoid Over-Structuring When Growing
	The Product Level: How to Forecast the Success of New Entertainment Products
		Some Words on the Essentials of Success Prediction
		Prediction Methods: Feature-Based Versus Diffusion-Based Success Prediction
			Feature-Based Approaches of Success Prediction
			Diffusion-Based Approaches of Success Prediction
				The “Bass Model” of Diffusion
				Applying Diffusion Models to Entertainment Products
		The “When” of Success Predictions: Early Versus Later Approaches
			Early-Stage Predictions for Entertainment Products
			Later-Stage Predictions for Entertainment Products
			Multi-Stage Prediction Models
		So, Better to Wait for the Fanny to Squirm or Use Prediction Models?
	Concluding Comments
	References
11 Entertainment Communication Decisions, Episode 1: Paid and Owned Channels
	To Control or Not to Control: Some Words on the Three Basic Communication Categories
	What to Communicate: Designing the Content that Fuels Entertainment Communication Channels
		What Makes a Powerful Trailer?
			The Roles of Trailers Then and Now
			Three (or More) Principle Appeals of Trailers
		What Makes a Powerful Poster Ad?
		The “How-Much” Question: Can There Be Too Much of a Good Thing?
			The Pros and Cons of Spoilers
			The “Anticipatory Route”: How Spoilers Influence Consumption Intentions
			The “Evaluative Route”: How Spoilers Influence Enjoyment
			Beware of  Who You Spoil—and for Which Product You Do so
	Attracting Consumers via Paid Media: The Role of Advertising
		The Functions of Advertising
		How Much to Spend—and When: Some Introductory Comments on Advertising Budgets and Timing
		Some General Insights on the Effectiveness of Entertainment Advertising
		The Effectiveness of Pre-Release Advertising
			Average Effects
				The Case of Movies
				The Case of Other Entertainment Products: TV Series and Video Games
			More on Contingencies: Interestingness, Uncertainty, Situational Factors. And Culture?
		The Effectiveness of Post-Release Advertising
		Balancing Advertising Timing Within and Between Sequential Distribution Channels
	Attracting (and Keeping) Audiences via Owned Media: Playing Pinball
		The Pinball Framework of (Entertainment) Communication
		Content that Matters
		Managing Consumer Engagement: Co-Creation and Moderation
			The Logic of Co-Creating Entertainment Brand Stories
			Some Practical Examples of Co-Creating Entertainment Brand Stories with Fans
		How Effective is Communication Through Owned Media?
		A Different Kind of Owned Media: Packaging as a Communication Instrument
	Concluding Comments
	References
12 Entertainment Communication Decisions, Episode 2: “Earned” Channels
	Informed Cascades: The Power of Word of Mouth
		What Makes Us Articulate Word of Mouth?
		Does Word of Mouth Influence Entertainment Product Success? Yes. But It’s Complicated
			Average Effects: Word of Mouth (Valence) Matters!
			The Product Type Matters
			Not All Word of Mouth is Created Equal
			Not All Word-of-Mouth Givers are Equal, Too…
			The Timing of Word of Mouth
			When Consumers Have Different Views: The Role of  Word-of-Mouth Variance
	Uninformed Cascades: The Power of Herds
		Post-Release Action-Based Cascades: When Entertainment Success Breeds Entertainment Success
			Some Words (and Numbers) on the Mechanisms at Work
			The Impact of Popularity on Entertainment Success
			Success-Breeds-Success Between Channels and Markets
				Inter-Channel Success-Breeds-Success
				Inter-Market Success-Breeds-Success
			Managerial (Mis-)Use of Post-Release Uninformed Cascades
		Pre-Release Action-Based Cascades: Buzz
			So, What Exactly is “Buzz”?
			How Buzz is Linked to Product Success
				The Link Between Buzz Volume and Product Success
				Differences Between Buzz Measures: Where Behaviors, Pervasiveness, and Content Matter
				Buzz Cascades and Thresholds
				Buzz Patterns Over Time
			And What Drives Buzz?
			The Mediating Role of Buzz
	Automated Personalized Recommendations
		How Recommender Systems Work: A Look at Their Algorithmic Logic
			Collaborative Filtering: The Matrix Completion Challenge
				User-to-User Collaborative Filtering
				Item-to-Item Collaborative Filtering
			Content-Based Recommendations
				Content-Based Recommenders: An Example
				Challenges for Content-Based Recommenders: The Critical Role of Attributes
			Hybrid Approaches: The Best of All Recommender Worlds?
		Recommenders are Way More Than Algorithms: Beyond Matrix Completion
			Contextualization
			Design and Interaction
			Trust
		How “Good” are Recommender Systems?
	Professional Reviews
		Review(er) Effects on Consumers: The “Influencer Versus Predictor” Controversy
			Initial Insights: The Eliashberg and Shugan Study
			What We Have Learned About Review Effects Since Then
		Toward an Even Richer Understanding of Professional Reviews: Moderators and Mediators of Their Impact
			Product Factors as Moderators
			Consumer Factors as Moderators
			Macro Factors as Moderators
			Distributors as Mediators
		Managerial (Mis-)Use of Professional Reviews
	Awards as Recognitions of Excellence in Entertainment
		Some Essentials of Entertainment Awards
		Awards and Success: What Entertainment Science Can Tell Us About Their Link
			Why Determining the Commercial Impact of Awards is Quite a Challenge
			Monetizing the Oscars and Other Learnings
		Managerial (Mis-)Use of Awards
	Concluding Comments
	References
13 Entertainment Distribution Decisions
	The Timing Challenge: When is the Right Time for an Entertainment Product?
		Isolated Timing Effects
			Long-Term Timing
			Mid-Term Timing
				Seasonal Patterns
				Demand-Sided Versus Supply-Sided Effects
				Moderating Factors
			Short-Term Timing
		Competitive Timing
			How Competition Affects Entertainment Product Success
			What is the Right Time to Enter a Competitive Entertainment Market?
			Changing the (Release) Time
	The Multi-Channel Challenge: Orchestrating the Multiple Formats of Entertainment
		What’s to be Considered When Designing the Optimal Channel Mix
			A Quick Overview of Entertainment Windows and Underlying Interests
			A Framework of the Forces that Determine Optimal Windows
				Macro-Level Forces
				Micro-Level Forces
		Valuing Alternative Distribution Models Empirically
	The Piracy Challenge: How to Deal with Competitors Who Offer One’s Own Products for Free
		The Impact of Piracy
		How to Fight Entertainment Piracy
			Why and When Do Consumers Prefer the Illegal Copy Over the Original?
			Some Thoughts (and Findings) on Anti-Piracy Strategies in Entertainment
	Concluding Comments
	References
14 Entertainment Pricing Decisions
	A Primer on Pricing Theory: Customer Value as the True Foundation of Pricing
	The Uniform Versus Differential Pricing Puzzle of Entertainment
		Theoretical Arguments for Differential Pricing—and Against It
		Consumer Reactions to Entertainment Product Prices in General
		What We Know About Consumer Reactions to Differential Pricing for Entertainment Products
	Price Discrimination: Different Prices for Different Customers (and Products)
		First-Degree Discrimination: “Perfect” Price Discrimination
		Second-Degree Discrimination: Versioning and Bundling
			Non-Linear Pricing: Quantity-Based Pricing
			Versioning: Let the Consumer Pick!
			Bundling: A Special Case of Versioning
			Cross-Subsidization (or Informal Bundling)
		Third-Degree Discrimination: Segment Pricing
	Concluding Comments
	References
15 Integrated Entertainment Marketing: Creating Blockbusters and Niche Products by Combining Product, Communication, Distribution, and Pricing Decisions
	The “Pre-Sales Approach”: The Blockbuster Concept
		Defining the Blockbuster Concept
		“The Monster that Ate Hollywood”: A Short Blockbuster History
		Blockbuster Diffusion: Innovators and Buzz are What It Takes!
	The “Experience Approach”: The Niche Concept
		Defining the Niche Concept
		Niche Diffusion: Imitators and Quality are What It Takes!
		The Long Tail: Using the Opportunities of Digital Media
	Blockbusters Versus Niche Products: Where We Stand Today and the “Too-Much-of-a-Good-Thing” Problem
		Living in a Blockbuster World!
		The “Too-Much-of-a-Good-Thing” Trap
	Concluding Comments
	References
Correction to: Entertainment Pricing Decisions
	Correction to: Chapter 14 in: T. Hennig-Thurau and M. B. Houston, Entertainment Science, https://doi.org/10.1007/978-3-319-89292-4_14