My post of last week on exploiting the herd raised some discussion about the extent to which intentional manipulation of popularity measures is unethical. Before addressing this question, I’d like to present another example of the same type of manipulation, this one more current and widespread. Freakonomics author Stephen Dubner takes a look at evidence that move studios give incentives to theaters to inflate the opening weekend sales numbers for a movie, knowing that those stats can be crucial to the longer-term financial success of the movie.

I happened to be riding to work with an exec from one of the major studios this morning, and he mentioned that the studios are increasingly making deals with theaters to inflate opening numbers. In particular, they will give the theaters very high revenue share for the first X days of the movie (he mentioned 100% for the first 3 days), incentivizing the theater to maximize the number of screens the movie’s shown on, inflating opening numbers.

The particular example of Superman and Pirates were actually the ones he brought up—that Superman’s decline was partially due to the theaters’ incentive period running out.

I have no idea how true or prevalent this is, but something you might want to look into. This would be done for movies which the studio considers potential “hits”, increasing discrepancy between them and normal movies.

To me, 100% of the take even for three days sounds ludicrous, but I could certainly imagine the promise of inflating the real figures by 25% for an additional 5 or 10% of the short-term take. I’ve always assumed the reported box-office figures were pretty much made up, anyway. But, as widely as these figures are reported these days, essentially serving as the best marketing a movie could hope for, I would think there’s plenty of value in paying to drive up those first-week numbers as high as possible. It’s hard to imagine anyone in Hollywood objecting, really: studios and producers all want to look more successful than they are, and actors and directors get to negotiate their next deal based on inflated figures.

There is reason to believe that the box office¹ profit function for a movie is nonlinear; hits tend to become even bigger hits, while the viewership of an unpopular movie tends to fall off quickly. This gives Hollywood executives strong incentives to do what they can to boost the numbers in the first week, and especially the all-important first weekend of a movie. Those efforts might come in the form of perfectly legitimate marketing campaigns, or in the form of greyer strategies like that discussed above–incenting the individual theaters to inflate their numbers. Like the proverbial flap of a butterfly’s wings, small differences in early viewership can lead to large differences in overall viewership.

Read more: Box-Office Payola?

Previously: Exploiting the Herd: A Case Study

[1] I’m specifically talking about theater numbers here–I think the markets for movie rentals and DVD purchases exhibit somewhat different dynamics.