Researcher ORCID Identifier

0000-0002-4973-8378

Graduation Year

2022

Date of Submission

12-2021

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Florian Madison

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2021 Marco L. Castillo

Abstract

Watching movies from the convenience of your home has become wildly popular through the emergence of Netflix, Hulu and other streaming platforms. Questions regarding the popularity negatively affecting the movie theater industry have begun to emerge as Disney and Paramount, two titans in the movie production business, have created their own streaming platforms called Disney+ and Paramount+. This study takes data from Netflix and Hulu’s subscriber base and a variety of movie statistics. My hypothesis was that streaming services would have an inverse effect on the success of movie theaters over time. Streaming services would be considered a substitute for the movie business in the future, and not a compliment where both could coexist with sustained economic success. I used two economic models to project the future of the movie industry. The time series model was one regarding the relationship between streaming platform subscribers and movie tickets (average ticket price and total tickets sold). The cross-sectional model examined if factors for determining a movies success have changed since the emergence of streaming platforms. The independent variables for this regression included budget, IMBd rating, genre, and the dependent variable was gross revenue. The results of the regressions were that ticket sales were negatively correlated with an increase in subscribers for Hulu and Netflix, while ticket prices were positively correlated with an increase in subscribers for Hulu and Netflix year by year. With regard to the cross-sectional model the results proved statistical significance for IMBd rating and budget, and in turn their effect on movie success decreased from 2008 to 2018. While all these findings point toward streaming platforms being a substitute for attending the movies, I do not consider this to be conclusive evidence towards the demise of movie theaters. Since the data only goes back to 2007 for streaming platforms it is impossible to unquestionably say that it will replace the experience of going to the movie theaters. However, I do think there is conclusive evidence toward the changing landscape of movie viewership and we will see adjustments from movie production companies in the future.

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