Audience Heterogeneity and the Effectiveness of Market Signals: How to Overcome Liabilities of Foreignness in Film Exports?

Abstract

This study extends research on the importance of market signals in international markets for cultural products by examining not only when market signals are important but also what types of market signals are most important to which audiences. Specifically, we argue that audience heterogeneity influences the effectiveness of commercial performance and artistic acclaim as market signals in international film markets. Audience heterogeneity refers to the differences in the cultural knowledge and preferences of domestic and foreign consumers (end audiences) and product specialization of domestic and foreign distributors (intermediary audiences). Our empirical setting is the European film industry. We use a large sample of films produced and distributed domestically and internationally in Europe between 2004 and 2009. We find that domestic commercial performance and film festival participation increase international film success, but also that their effects depend on the cultural distance between countries and the use of major or independent distribution in the domestic and foreign markets.

Behind film performance in China’s changing institutional context: The impact of signals

“…Fang (2010), who opposes Hofstede (2007), highlights the scope for people to absorb cultural learning and to engage in information sharing, unrestricted by traditional national borders and cultural differences. Nevertheless, Kim and Jensen (2014) highlight a continuing difficulty in promoting cultural, experience goods such as films in a foreign market due to the greater cultural distance (as described by Hofstede, 2001) between the filmmakers and the foreign audience. Walls and McKenzie (2012) similarly refer to the challenge of cultural discount when films are exported to audiences with less knowledge of the Bsocial values, historical perspective and context, and language.^Films, which, by nature, are cultural products, are embedded in the national cultural context in which the films were originally made.…”

“…24 The firm also has an extra scene featuring a Chinese actress with extra storyline. However, overall such a localization strategy is costly and is not a widely accepted approach by filmmakers (Kim & Jensen, 2014). Some literature already considers the factors determining the success of imported films into a particular market, with a consensus having emerged that imported films perform better only if the cultural distance from the home market is less (Fu & Lee, 2008).…”

“…Thus signaling theory is particularly relevant for examining film performance. However, despite the fact that the theory has been applied in a wide array of research contexts (e.g., Connelly et al, 2011;Hou, Liu, Fan, & Wei, 2016;Wu, Li, & Li, 2013) and various signal variables have been examined in film industry research, its explicit application to the film industry literature remains limited, exceptions including Akdeniz and Talay (2013), Basuroy, Desai, and Talukdar (2006), and Kim and Jensen (2014). At the core of signaling theory are signals that contain positive and/or negative information which is conveyed to the receivers: signals must be credible to attract a receiver's attention and receivers stand to gain from making decisions based on the information contained in credible signals.…”

“…This reflects their shared tacit background, similar ways of thinking and common grounds on pre-existing and accumulated know-how, know-why and know-what. Consequently filmgoers should have better understanding of domestic artistic conventions and domestic film products (Kim & Jensen, 2014). Therefore, tacit information embodied in a film is more easily accepted by consumers of the same or similar cultural background as producers.…”

“…Consequently, we address Kim and Jensen's (2014) concern that insufficient literature addresses which signals consumers use as opposed to focusing on producers' use of such market signals. Besides those signals studied in the extant literature, we also examine two signals that have been typically overlooked in previous studies (i.e., imported films and enhanced film formats such as 3D or IMAX).…”