Consumer reviews and product life cycle: On the temporal dynamics of electronic word of mouth on movie box office

Abstract

Research on customer reviews has flourished in the last two decades, accelerating the study of electronic word-of-mouth (eWOM). However, we know little about how the effects of eWOM change over a product’s life cycle. In this article, we investigate the temporal dynamics between eWOM and box office sales over the life cycle of movies. We build a simultaneous equations model to study these temporal dynamics and find that (i) the positive effects of cumulative eWOM volume and valence on box office sales decline fast over a movie’s life cycle; (ii) to accurately estimate their effects it is necessary to account for their interaction over time, and (iii) the effect of cumulative eWOM valence on current eWOM valence stays positive over the life cycle while the positive effect of cumulative eWOM volume on current eWOM volume decays fast. These results offer actionable insights to practitioners seeking to leverage eWOM effects.