Wednesday, 31 October 2012

What do all these different multipliers mean?

There are three types of multipliers talked about regularly on HSX - the adjust multiplier, the delist multiplier and the internal multiplier.

The adjust multiplier is the only one that is an official HSX term.  A moviestock for a movie that has a wide release is adjusted in price based on its opening weekend box office gross.  Most of the time, the adjust multiplier is 2.7 - in other words, the moviestock adjust price is calculated by the following formula:

        Friday-to-Sunday box office (in millions) * 2.7

Moviestocks for movies opening over a four-day weekend have a different multiplier.  Their adjust price is calculated using the following formula:

        Friday-to-Monday box office (in millions) * 2.2

There are other adjust multipliers used for movies released on two-day weekends and five day weekends and also for movies that have expanded to wide release.  Check the definition of Adjust Price in the Glossary for the full list.

The internal multiplier is calculated by the following formula:

       internal multiplier = weekend box office / Friday box office

Movies targeted at teenagers and hardcore fans who want to see movies on opening night often have low internal multipliers.  Movies targeted at families and at adult audiences, who are less likely to see a movie on Friday night, tend to have higher internal multipliers.

You can use the internal multiplier as an indicator of word-of-mouth, which is a big factor in whether audiences will continue to turn out to see the movie in the coming weeks.  An internal multiplier of 3.0 or higher suggests good word-of-mouth, while an internal multiplier of 2.5 or lower is weak.

You can also use the internal multiplier to estimate a movie's opening weekend box office from its Friday numbers.  Just look at the internal multipliers achieved by similar movies are applying them to the new opener.

The delist multiplier is calculated using the following formula:

       delist multiplier = box office after four weekends (less previous box office)
                                                       opening weekend box office

If you are going to trade moviestocks after they adjust, you should learn how to predict delist multipliers.  Relevant factors are the movie's word of mouth, the target audience, whether the movie is front-loaded and the time of year the movie is released.  You can also look at historical delist multipliers of similar movies.

Similar to the internal multiplier, movies aimed at teenagers and hardcore fans tend to have low delist multipliers, while movies targeted at adults and families will have high delist multipliers - especially if they also have good word of mouth.

The time of year can also influence the delist multiplier.  For example, movie audiences are often busy before Christmas but have plenty of free time to see movies over the holidays, so movies that open close to Christmas usually have high delist multipliers.  Similarly, summer movies can have higher-than-average delist multipliers, because children on school holidays have more opportunities to see movies.

The following table looks at the delist multipliers for over 1600 movies released between January 1999 and September 2012, to give an average delist multiplier for each month of the year.  Obviously these are averages that give you an idea of what to expect, and not iron laws that will be followed by new releases.

Average Delist Multiplier













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