The Price of Streaming

Abstract

We study the impact of streaming strategies on total revenues for movies. Using panel data from 2013-2021 on US box office ticket sales, transactional video on demand (TVOD) rentals, digital sales, DVD/Blu-ray sales and rentals, as well as streaming video on-demand (SVOD) availability information, we estimate a dynamic structural model of demand across channels. We first analyze a direct-to-streaming strategy implemented by Warner Bros. (WB) and HBO Max: Project Popcorn. We determine that WB was not incorrect with its streaming strategy, notwithstanding the popular view in the media and the industry. We provide quantitative support and qualitative insights on the performance of hybrid strategies: simultaneous release in theaters and streaming, and delayed streaming within the theatrical window. Through "what-if" analyses our structural model, updating as new data become available, can double as a decision support tool to aid studio executives in crafting their streaming strategy.

Keywords: movie industry, streaming, SVOD, structural estimation, Project Popcorn