The Effect of Internet Word-of-mouth on Experience Product Sales --- An Empirical Study Based on Film Online Reviews

Abstract

When purchasing experience products, more and more modern consumers are inclined to make a purchase decision through internet word-of-mouth on third-party websites. Based on a sample panel data of online movie reviews from gewara.com, this paper analyzes the impact of online reviews on movie box-office revenue from three dimensions: review volume, review scores and star reviews. The results show that the online reviews have a significant impact on movie box-office revenue. Specifically, the review volume has a significant positive impact on box-office revenue, and the impact effect shows parabola trends overtime. The impact of star review on box-office revenue mainly occurred in the first week, and the negative effect of 1 star reviews exceeds the positive effect of 5 star reviews. Management implication is proposed based the results.