Financial and Nonfinancial Performance Measures for Managing Revenue Streams of Intellectual Property Products: The Case of Motion Pictures

Abstract

Abstract Purpose We examine the role of financial and nonfinancial performance measures in managing revenues derived from life cycles of a type of intellectual property products − motion pictures. Design/approach Our study focuses on the first two markets in which audiences can watch a motion picture – the upstream theatrical market and the downstream home video market. We combine data collected from numerous public and proprietary sources and form a final sample of 654 motion pictures. Then we perform regression analysis on the data. Findings First, three measures of a movie’s performance in the theatrical market, opening box office revenue, peak rank, and weeks at the peak rank, have positive effects on subsequent revenues in the home video market. Second, the same set of performance measures also predicts the motion picture’s life span in the theatrical market. Third, when the actual life span of a motion picture in the theatrical market deviates from its predicted value, the total return on investment in the motion picture decreases. Research limitations We do not have data on other downstream markets related to motion pictures, such as pay-per-view and online video streaming. Practical implications This study suggests that the public and proprietary data can be used to inform managerial decisions regarding intellectual property product life cycles. Originality/value This is the first accounting study that directly examines life cycle revenues of intellectual property products. We also extend literature on revenue driver and revenue management research to the product level.