How successful movies affect performance of sequels: Signal theory and brand extension theory in motion picture industry

This research investigates how reviews and attendance of predecessor movie influence sequels' performance. The empirical analysis reveals the influencing mechanism of predecessor movie' characteristics and following sequels. In particular, using 32-year-long data the authors find that commercial success of parent movie enhances the first sequel attendance, but have little impact on high number sequels. However, positive ratings of parent movie from both critics and amateurs do not affect performance of sequels (neither first sequel nor high number sequel). They also find that high attendance of predecessor sequel induces more attendance of next sequel but reviews of predecessor movie from both critics and amateurs have little impact on next sequels performance. These findings indicate attendance of predecessor movies is an critical predictor and influencer for commercial success of next sequel.