Estimating the Efficiency of Sequels in the Film Industry

Film industry has been under investigation from social scientists for the last 30 years. A lot of the work has been dedicated to the analysis of the sequel effect on film revenue. The current paper employs data on wide releases in the US from 2010 to 2014 and provides a new look at sequel return to the domestic box office. We apply the Heckman and nonparametric sample selection approach in order to control for the non-random nature of the sequels’ sample. It was found that sequels are successful only due to the fame of the first part of the series. If the sample selection is taken into control, sequels do not excel one part movies in terms of the box office. Moreover, decomposing the main factors of sequels’ overearnings compared to one part movies, we found that sequels have a less competitive environment, a higher production budget, more time being in release and the number of opened theatres.