Intertemporal Movie Distribution: Versioning when customers can buy

Valletti Tommaso M.Calzada Joan
CEIS Research Paper
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 anoher, 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
Number: 198
Keywords: Product segmentation; versioning; sequential introduction; distribution channels; movie industry; information goods.
Date: Monday, June 20, 2011
Revision Date: Monday, June 20, 2011