Time Consistency and Seller Commitment in Inter-Temporal Movie Distribution: An Empirical Study of the Video Window

Abstract

We report an empirical study of determinants of the "video window" (the interval between a movie's theatrical release and its video release), primarily based on a sample of 1429 theatrical feature films released on video in the United States between 1988 and 1997. Results support our primary hypothesis that U.S. motion picture distributors resolved a time-consistency problem by coordinating their behavior to maintain longer windows than would result from a competitive industry in which distributors set windows without regard to their effect on consumer expectations. Results suggest a loosely coordinated window benchmark, slightly declining over the period, of approximately 6 months.

Keywords: time consistency, commitment, video, motion picture, intertemporal price discrimination

JEL Classification: L11, L82