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Financial Analytics: Science and Experience
 

The method of neural network forecasting of box-office grosses of movies

Vol. 10, Iss. 4, APRIL 2017

PDF  Article PDF Version

Received: 20 January 2017

Received in revised form: 31 January 2017

Accepted: 22 February 2017

Available online: 16 April 2017

Subject Heading: MATHEMATICAL ANALYSIS AND MODELING IN ECONOMICS

JEL Classification: C02, C45, C53, C83, D83

Pages: 449-463

https://doi.org/10.24891/fa.10.4.449

Yasnitskii L.N. Perm State National Research University, Perm, Russian Federation
yasn@psu.ru

Beloborodova N.O. Higher School of Economics, Perm, Russian Federation
natasha09.12@mail.ru

Medvedeva E.Yu. Higher School of Economics, Perm, Russian Federation
win.mail.ru95@inbox.ru

Importance The article focuses on the neural network forecasting in the film-making industry.
Objectives The article examines what opportunities economic and mathematical modeling provides to forecast revenue and profit from coming movie distribution and identifies factors that determine whether film-making business becomes a commercial success.
Methods The economic and mathematical model relies upon the neural network trained with available historical data on movie distribution and including 20 input parameters. Computer experiments were performed with the ‘freezing’ method. We used the neural network for computations if any of input data changes, meanwhile the rest of them remain the same.
Results Root-mean-square relative error of the model accounted for 13.8%, with the determination criterion being 0.86%. We refer to The Da Vinci Code, Star Wars to demonstrate what the model is capable of.
Conclusions and Relevance Virtual increase in the film budget influences projections of box-office grosses and revenue differently. Other aspects of films also have an effect on the success of film-making business. Having conducted computer experiments, we provide our recommendations, which could boost box-office grosses of films. The proposed economic and mathematical model can be used to optimize financial costs and choose parameters to plan new films to come. The model allows for forecast of box-office grosses and profit from film-making, and examine how various aspects influence the commercial result of film-making.

Keywords: film-making industry, revenue, box-office grosses, neural network, forecast

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