Intertemporal Movie Distribution: Versioning When Customers can Buy Both Versions

45 Pages Posted: 14 Mar 2011

See all articles by Joan Calzada

Joan Calzada

University of Barcelona - Department of Political Economics

Tommaso M. Valletti

Imperial College Business School; Centre for Economic Policy Research (CEPR)

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Date Written: March 2011

Abstract

We study a model of film production, distribution and consumption. The studio can release two goods, a theatrical and a video version, and has to decide on its versioning and sequencing strategy. In contrast with the previous literature, we allow for the possibility that consumers watch both versions. This simple extension leads to novel results. It now becomes optimal to introduce versioning if the goods are not too substitutes for one another, even when production costs are zero (pure information goods). We also demonstrate that a 'day-and-date' strategy can be optimal when the studio is integrated with the exhibition and distribution channels. In contrast, a 'video window' is typically the outcome of the negotiation between the studio and independent distributors and exhibitors.

Keywords: Distribution channels, Information goods, Movie industry, Product segmentation, Sequential release, Versioning

JEL Classification: D21, L12, L82, M31

Suggested Citation

Calzada, Joan and Valletti, Tommaso M., Intertemporal Movie Distribution: Versioning When Customers can Buy Both Versions (March 2011). CEPR Discussion Paper No. DP8279. Available at SSRN: https://ssrn.com/abstract=1782573

Joan Calzada (Contact Author)

University of Barcelona - Department of Political Economics ( email )

Av. Diagonal, 696
Barcelona, 08034
Spain
+34 93 402 1933 (Phone)
+34 93 402 4573 (Fax)

Tommaso M. Valletti

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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