The Downside of Staged Development: Evidence from Television Shows

32 Pages Posted: 22 Jan 2020 Last revised: 30 Mar 2020

See all articles by Ankur Chavda

Ankur Chavda

HEC Paris - Strategy & Business Policy

Date Written: December 13, 2019

Abstract

Firms often partially fund new projects for preliminary development rather than fully fund them to fruition. This staged development yields early feedback which can improve an individual project through learning and a portfolio of projects by the termination of weaker ideas. Although prior empirical studies have found a positive relationship between staged development and outcomes, these studies were limited to settings that only allowed for learning, i.e. projects were never terminated. To capture the full effect, this paper exploits a form staged development in the television show industry where a new show’s first episode is filmed and evaluated before commissioning the full show. Using Netflix’s entry into television show production as a source of randomization, a negative treatment effect of piloting on show ratings is measured for shows that are more likely to survive piloting. Mechanism evidence suggests piloting worsens shows by impeding their ability to attract actors and lowering planning of the full season. Hence, staged development can have a downside: the lack of commitment to projects can prevent them from getting the resources and effort necessary for success.

JEL Classification: D24, D81, L23, L26, L82, M11, O31, O32

Suggested Citation

Chavda, Ankur, The Downside of Staged Development: Evidence from Television Shows (December 13, 2019). HEC Paris Research Paper, No. SPE-2019-1357, Available at SSRN: https://ssrn.com/abstract=3477199 or http://dx.doi.org/10.2139/ssrn.3477199

Ankur Chavda (Contact Author)

HEC Paris - Strategy & Business Policy ( email )

Jouy-en-Josas Cedex, 78351
France

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