Digitization and Flexibility: Evidence from the South Korean Movie Market

61 Pages Posted: 12 Jun 2018 Last revised: 28 Oct 2020

Date Written: October 2020

Abstract

We examine how the introduction of digital cinema technologies in the South Korean movie industry created flexibility for theaters in movie showings. Using detailed data on theaters' digital adoption and daily assortment decisions between 2006-16, we show that on average digitization is associated with both increased variety of movies and increased showings of the most popular movies. But, delivering these benefits to consumers took at least four years to materialize and varied with the number of screens in a theater. During the early years of theater digitization, product variety declined in larger theaters. Yet when digital movies became widely available, product variety increased. Once digital movies were broadly available, we show that theaters created increased product variety during less popular time slots and offered more showings of consumers' favorite movies during peak demand on weekend evenings. Overall, we show that digitization of movies and projection technology creates flexibility in scheduling, which seems to allow theaters to better respond to consumer demand.

Keywords: Digitization, Flexibility, Intermediation, Product Variety, Concentration, Movies

JEL Classification: D22, L11, L82, O33

Suggested Citation

Yang, Joonhyuk and Anderson, Eric and Gordon, Brett R., Digitization and Flexibility: Evidence from the South Korean Movie Market (October 2020). Available at SSRN: https://ssrn.com/abstract=3185847 or http://dx.doi.org/10.2139/ssrn.3185847

Joonhyuk Yang (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Eric Anderson

Northwestern University - Department of Marketing ( email )

Kellogg School of Management
2001 Sheridan Rd.
Evanston, IL 60208
United States

Brett R. Gordon

Northwestern University - Kellogg School of Management ( email )

2211 Campus Drive
Evanston, IL 60208
United States

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