Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions

Marketing Science, Forthcoming

Posted: 9 Mar 2012

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)

Multiple version iconThere are 4 versions of this paper

Date Written: March 8, 2012

Abstract

We study a model of film 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 some consumers may 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 the simultaneous release of the versions ("day-and-date" strategy) can be optimal when the studio is integrated with the exhibition and distribution channels. In contrast, a sequential release ("video window" strategy) is typically the outcome when the studio negotiates with independent distributors and exhibitors.

Keywords: Product segmentation, versioning, sequencing, distribution channels, movie industry, information goods

JEL Classification: L82, M31, D42, L12, L22

Suggested Citation

Calzada, Joan and Valletti, Tommaso M., Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions (March 8, 2012). Marketing Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2018166

Joan Calzada

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 (Contact Author)

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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