Talk it through A Flop or a Hit: Investigating the Impact of the Evolution of Consumer Reviews on Product Success

Abstract: With the increasing popularity of user-generated content, consumer reviews play a more important role in the success of new products. Although past literature identified important metrics of reviews such as volume, valence, and dispersion, and determined their effects on product sales, substantial questions remain. For example, how do consumer reviews evolve? Do valence, volume, and dispersion affect one another, and do marketing actions like advertising and distribution affect the evolution? Does the evolution affect sales, and which metric helps predict market success better? In this paper, using functional data analysis on 511,972 online movie reviews collected from leading movie websites on 405 movies released from June 2005 to Dec. 2010, we show that the metrics of evolution of reviews are important predictors of revenue, but that their effects vary across time. We conclude by discussing how managers can influence the impact of consumer reviews on product success.