Hollywood’s Next Great Studio Head Will Be a Computer
Film companies are following Netflix by using big data to make big decisions — yet it could cut down on the risk-taking that makes classics
“Nobody knows anything,” wrote legendary Hollywood screenwriter William Goldman in 1983. “Not one person in the entire motion picture field knows for a certainty what’s going to work. Every time out it’s a guess and, if you’re lucky, an educated one.”
Nearly 40 years later, Hollywood studios are still making wild guesses about which movies might break even or make a profit. Films are what economists refer to as experience goods, so viewers don’t know whether they’ve made a good decision until they’ve watched the film. Movie marketing, too, is still costly and inaccurate, averaging $30 million per film but rising to as much as $200 million for major blockbusters. For Hollywood, this informational asymmetry has always been a problem, and in an industry in which every product represents an extremely costly investment, nothing is worse than unpredictability.
The internet, however, is a rich resource of behavioral consumer data that holds many of the answers Hollywood needs — provided it will look for them. Even as Silicon Valley built multibillion-dollar empires off the back of…
