Intertemporal Movie Distribution: Versioning When Customers can Buy Both Versions
45 Pages Posted: 14 Mar 2011
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Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions
Intertemporal Movie Distribution: Versioning When Customers can Buy Both Versions
Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions
Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions
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: Suggested Citation
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Intertemporal Movie Distribution: Versioning When Customers can Buy Both Versions
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