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Market-Based Solutions to Vital Economic Issues
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Mar 11, 2019

The Ripple Effect of Firm-Generated Content for New Movie Releases

Marketers create social media, in the form of firm-generated content (FGC), to ignite interest in new products such as movies; in turn, there is a clear need to understand whether and how FGC influences demand. With a descriptive study, the authors investigate two potential mechanisms by which FGC may drive box office revenues: (1) a direct mechanism, such that users who see FGC directly drive revenue, and (2) a “ripple effect,” by which FGC increases movie-related user-generated content (UGC), which then drives consumption. The study data include 135,153 firm-generated and 4.9 million user-generated Twitter posts associated with 159 movies released by major studios in 2014 and 2015. Linear panel models reveal a positive, significant effect of FGC on movie sales, which UGC fully mediates, in support of a ripple effect. The model accounts for endogenous firm actions, unobserved movie heterogeneity, competition, and advertising. The evidence in support of ripple effects suggests that movie executives should not focus solely on gaining followers but rather on creating FGC that sparks conversations among users.

Note: Research papers posted on SSRN, including any findings, may differ from the final version chosen for publication in academic journals.


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