Impact of Underlying Demand and Agglomeration of Supply on Seasonality: the Case of the Hollywood Film Industry

The authors argue that it is possible to break the demand for films into two types: the underlying demand accounted for by audiences’ behaviours owing to events outside the film industry (vacations, climate, etc.); and demand due to the agglomeration of supply by studios due to release dates selected close to each other. To ensure the success of their films, movie studios exploit peaks in demand. Such agglomeration increases seasonality and could lead studios to overestimate the true level of underlying demand at particular times. The aim of this article is to isolate the underlying demand in order to assess studios’ choices in terms of release dates. The authors show that two periods – the beginning of the year and summer – are underutilized, with the release of fewer films than the market is able to absorb, while two other periods – spring and year’s end – are overexploited. The choice of release date based on this criterion is a good predictor of a film’s performance.