The Netflix Effect: The Movie Industry and New Data

The COVID-19 pandemic has had an unmistakable influence on the movie industry.

Now that much of the world is hunkering down at home — bingeing on shows and movies via Netflix, Hulu and Disney Plus — movie studios are releasing films directly to streaming video on-demand services and bypassing traditional movie theaters altogether.

Enter Anthony Palomba. A visiting assistant professor to Darden School of Business, Palomba studies how consumers’ growing appetite for streaming content is changing the way studios produce and market feature films. But long before the coronavirus brought about this most recent challenge, he was thinking about how to help studios refine their marketing approaches.

Specifically, Palomba wanted to show how the film industry could go beyond traditional demographics and use more nuanced data of consumers’ tastes, personalities and lifestyles to better predict who is likely to see certain genres, how often and on which platforms.

Insights — If You Know How to Use Them

So Palomba designed a survey to capture such granular insights. “I wanted to show there’s more data out there for movie studios to capture, and how well it could explain movie platform consumption (e.g., viewing movies on smartphones and tablets) or movie genre consumption,” says Palomba of his research that was published in the Journal of Retailing and Consumer Services.

In his exploratory study of a national randomized sample of 301 people, he asked the classic demographic questions of age, gender, education, household income and political affiliation. He also asked consumers how they used certain media platforms to view movies, such as laptop computer, cable or satellite TV or video game consoles — as well as which 13 genres they enjoyed watching.

The survey also attempted to quantify the subjective category of “diffusion of innovation” by gauging how respondents’ peers influenced their decisions to purchase new products. It’s an important metric, Palomba argues, because it measures their own habits in relation to their friends. Participants were asked to rate how strongly they agreed with these sample statements: “If I heard that a new movie was available for purchase, I would be interested enough to buy it” or “In general, I am the last in my circle of friends to know the names of the latest movies.”

Learning From Consumers’ Self-Perceptions

In addition, the survey captured consumers’ personalities by asking them to “reflect upon who they saw themselves as.” For example, do they consider themselves talkative or able to handle stress well? As for lifestyle, respondents were asked questions to gain insight into their values, such as how long they commuted, whether they watched sports on television or read environmental magazines.

Then Palomba built a model to see correlations among all the factors and variables and determine which ones were most predictive of consumer behavior. He found that certain measurements were more useful than others in forecasting genre and platform preferences. For example, consumer personalities were linked to which kinds of movies they watched and how often: There were linkages between business-oriented consumers and horror and satellite TV; those who were indulgence-oriented were more prone to view dramas, adventure and streaming-on-demand platforms.

So-called “infusion of adoption” factors, which revealed whether consumers were interested in being at the forefront of technology adoption, showed those people who were more likely to watch movies on sophisticated platforms and had the personality traits of being inventive or informed.

Palomba stresses that these granular insights should not replace demographic measurements, such as age, ethnicity and gender, which are still useful. For example, his research found that males were more likely to watch science fiction, adventure, superhero and thriller movies, while women preferred romance themes.

The research leads to a case that studio executives should make more of an effort to “become more strategic in collecting personality and lifestyle data points.”  Not only does such information help movie marketers know their audiences better, it can be used by advertisers to determine which movie trailers and ads might be most effective.

Palomba, who came to Charlottesville this year from St. John’s University in Queens, New York, has focused his career trying to help studios make better business decisions in an era in which studies can spend tens of millions of dollars to market feature films. “I remember reading an article in Variety in 2016 about how Hollywood executives didn’t know their audiences, and this spurred me to start researching this topic,” he says.

The Power of Data

Palomba is passionately committed to communicating the importance of harnessing strategic data to his students at Darden. He teaches leadership communication and data visualization in the MBA program and management communication in the MSBA program. “What hits home for students is how businesses can tell stories from the data and use that to make decisions quickly,” he says. He aims to help students develop a respect — as well as a new skill set — for data analytics. “Data needs to be taken seriously, and companies don’t use it nearly enough,” he says, explaining that there’s a lot of opportunity to help industries outside of technology or banking discover its power.

In the meantime, as the COVID-19 pandemic prompts people to watch more content at home, Palomba is curious about the long-term impacts on the film industry: Will studios care more about the box office or signing up subscribers to streaming services? Or will certain genres, such as rom-coms, be more likely to be streamed than others? How will studios allocate their budgets accordingly? How will product placement and storytelling be impacted by exhibition on smaller screens?

Whatever the case, Palomba encourages studio executives to use the power of data to guide them.

Anthony Palomba authored “Consumer Personality and Lifestyles at the Box Office and Beyond: How Demographics, Lifestyles and Personalities Predict Movie Consumption,” which appeared in the Journal of Retailing and Consumer Services.