Mediating effect of word-of-mouth in movie theatre industry

This study examines the role of word-of-mouth in the movie theatre industry. Word-of-mouth is tested as a mediator between pre-release studio actions (stars, production budget, and number of screens) and box office revenue. The results suggest that word-of-mouth fully mediates the relationship between stars and box office revenue. A partial mediation of word-of-mouth occurs in case of production budget and number of screens as pre-release actions leading to box office revenue. This study emphasizes the importance of word-of-mouth in contributing and maintaining movie revenue, and also helps movie makers to take decisions on investing on word-of-mouth after releasing a movie. Key words: Word-of-mouth, pre-release, post-release, movie theatre industry, stars, box office revenue, product budget, number of screens.