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Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions

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Author Info

  • Joan Calzada

    ()
    (Departament de Politica Economica, Universitat de Barcelona, 08034 Barcelona, Spain)

  • Tommaso M. Valletti

    ()
    (Business School, Imperial College London, London SW7 2AZ, United Kingdom)

Abstract

We study a model of film distribution and consumption. The studio can release two goods, a theatrical version 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 substitute 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.

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File URL: http://dx.doi.org/10.1287/mksc.1120.0716
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Bibliographic Info

Article provided by INFORMS in its journal Marketing Science.

Volume (Year): 31 (2012)
Issue (Month): 4 (July)
Pages: 649-667

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Handle: RePEc:inm:ormksc:v:31:y:2012:i:4:p:649-667

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Keywords: product segmentation; versioning; sequencing; distribution channels; movie industry; information goods;

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References

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Cited by:
  1. Joan Calzada & Guillem Ordóñez, 2012. "Competition in the news industry: fighting aggregators with versions and links," Working Papers 12-22, NET Institute.

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