Uncovering the Effects of Digital Movie Format Availability on Physical Movie Sales

Hashim, M.J., S. Ram, and Z. Tang. “Uncovering the Effects of Digital Movie Format Availability on Physical Movie Sales,” Decision Support Systems, 117, pp. 75-86, 2019.

38 Pages Posted: 22 Sep 2010 Last revised: 20 Jun 2019

See all articles by Matthew J. Hashim

Matthew J. Hashim

University of Arizona

Sudha Ram

University of Arizona - Department of Management Information Systems

Zhulei Tang

Purdue University - Krannert School of Management

Date Written: March 13, 2018

Abstract

The impact of multi-channel technology-enabled digital goods on the sales of the physical counterpart faces uncertainty in the electronic commerce domain. We address the issue empirically by identifying the effect of the availability of digitally-delivered movies on physical DVD movie sales. Unique to our study is our interest in not only purchased digital goods but rented digital goods as well. We construct a robust panel dataset consisting of movie data collected from Amazon and Barnes and Noble on the same day for every movie observed. A key feature of our dataset is the multi-channel availability of digital purchase and digital rental movie formats at Amazon. Our results show that the availability of the digital purchase format does not have a significant effect on DVD sales. Surprisingly, the availability of the digital rental format is associated with a significant reduction in DVD sales. The results imply that a product substitution effect may be occurring between the digital rental and the physical DVD purchase of the same movie. We also conduct robustness tests to show under which conditions the effect is greatest. Our results also provide practical implications to inform strategies regarding movie format release windows.

Keywords: digital goods, cannibalization, multi-channel, DVD movies

Suggested Citation

Hashim, Matthew J. and Ram, Sudha and Tang, Zhulei, Uncovering the Effects of Digital Movie Format Availability on Physical Movie Sales (March 13, 2018). Hashim, M.J., S. Ram, and Z. Tang. “Uncovering the Effects of Digital Movie Format Availability on Physical Movie Sales,” Decision Support Systems, 117, pp. 75-86, 2019., Available at SSRN: https://ssrn.com/abstract=1680016 or http://dx.doi.org/10.2139/ssrn.1680016

Matthew J. Hashim (Contact Author)

University of Arizona ( email )

Department of Management Information Systems
Eller College of Management
Tucson, AZ 85721
United States

Sudha Ram

University of Arizona - Department of Management Information Systems ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States
520-621-4113 (Phone)

Zhulei Tang

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

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