IDEAS home Printed from https://ideas.repec.org/a/kap/jculte/v39y2015i1p65-83.html
   My bibliography  Save this article

Theatre allocation as a distributor’s strategic variable over movie runs

Author

Listed:
  • Juan Prieto-Rodriguez
  • Fernanda Gutierrez-Navratil
  • Victoria Ateca-Amestoy

Abstract

The main objective of this paper was to examine the relationship between the type of distributor and its influence on the theatre allocation process. In doing so, we study the differences in the theatre elasticity of box-office revenues between distributors, once the other determinants of movie box-office revenues and unobserved film characteristics have been controlled for. The empirical exercise involves estimating a panel for the weekly box-office revenue in the US motion picture market during the 2002–2009 period. Given the dynamic nature of our data and the endogeneity problems that some of the independent variables may present due to the presence of unobserved individual effects of movies, we use the Hausman–Taylor estimator. Regarding theatre allocation, we find evidence of similar, but not homogeneous, behaviour among the so-called Majors, which, in turn, differs from that observed for non-Majors regarding theatre allocation to films. These differences are greater when we consider a selection of more successful movies that are exhibited for a longer run, maybe due to the rise in the amount of uncertainty for this sample. Our results provide indirect evidence of the differences in the market power of distributors. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Juan Prieto-Rodriguez & Fernanda Gutierrez-Navratil & Victoria Ateca-Amestoy, 2015. "Theatre allocation as a distributor’s strategic variable over movie runs," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 65-83, February.
    • Handle: RePEc:kap:jculte:v:39:y:2015:i:1:p:65-83
    DOI: 10.1007/s10824-014-9220-7
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10824-014-9220-7
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10824-014-9220-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Anita Elberse & Jehoshua Eliashberg, 2003. "Demand and Supply Dynamics for Sequentially Released Products in International Markets: The Case of Motion Pictures," Marketing Science, INFORMS, vol. 22(3), pages 329-354.
    2. Jordi McKenzie, 2012. "The Economics Of Movies: A Literature Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 42-70, February.
    3. De Vany, Arthur S. & Walls, W. David, 2004. "Motion picture profit, the stable Paretian hypothesis, and the curse of the superstar," Journal of Economic Dynamics and Control, Elsevier, vol. 28(6), pages 1035-1057, March.
    4. Andrew Ainslie & Xavier Drèze & Fred Zufryden, 2005. "Modeling Movie Life Cycles and Market Share," Marketing Science, INFORMS, vol. 24(3), pages 508-517, November.
    5. Ravid, S Abraham, 1999. "Information, Blockbusters, and Stars: A Study of the Film Industry," The Journal of Business, University of Chicago Press, vol. 72(4), pages 463-492, October.
    6. Jehoshua Eliashberg & Anita Elberse & Mark A.A.M. Leenders, 2006. "The Motion Picture Industry: Critical Issues in Practice, Current Research, and New Research Directions," Marketing Science, INFORMS, vol. 25(6), pages 638-661, 11-12.
    7. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    8. Eva Deuchert & Kossi Adjamah & Florian Pauly, 2005. "For Oscar Glory Or Oscar Money?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 29(3), pages 159-176, August.
    9. Fernanda Gutierrez-Navratil & Victor Fernandez-Blanco & Luis Orea & Juan Prieto-Rodriguez, 2014. "How do your rivals’ releasing dates affect your box office?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(1), pages 71-84, February.
    10. Moul, Charles C., 2008. "Retailer entry conditions and wholesaler conduct: The theatrical distribution of motion pictures," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 966-983, July.
    11. Stephanie Brewer & Jason Kelley & James Jozefowicz, 2009. "A blueprint for success in the US film industry," Applied Economics, Taylor & Francis Journals, vol. 41(5), pages 589-606.
    12. Darren Filson & David Switzer & Portia Besocke, 2005. "At the Movies: The Economics of Exhibition Contracts," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 354-369, April.
    13. W. Walls, 2005. "Modeling Movie Success When ‘Nobody Knows Anything’: Conditional Stable-Distribution Analysis Of Film Returns," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 29(3), pages 177-190, August.
    14. Xinlei Chen & Yuxin Chen & Charles Weinberg, 2013. "Learning about movies: the impact of movie release types on the nationwide box office," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 37(3), pages 359-386, August.
    15. Ricard Gil & Francine Lafontaine, 2012. "Using Revenue Sharing to Implement Flexible Prices: Evidence from Movie Exhibition Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 60(2), pages 187-219, June.
    16. Ricard Gil, 2013. "The Interplay of Formal and Relational Contracts: Evidence from Movies," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(3), pages 681-710, June.
    17. De Vany, Arthur S & Walls, W David, 1997. "The Market for Motion Pictures: Rank, Revenue, and Survival," Economic Inquiry, Western Economic Association International, vol. 35(4), pages 783-797, October.
    18. Victor Ginsburgh, 2003. "Awards, Success and Aesthetic Quality in the Arts," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 99-111, Spring.
    19. Arthur De Vany & W. Walls, 1999. "Uncertainty in the Movie Industry: Does Star Power Reduce the Terror of the Box Office?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 23(4), pages 285-318, November.
    20. Darlene Chisholm, 2004. "Two-Part Share Contracts, Risk, and the Life Cycle of Stars: Some Empirical Results from Motion Picture Contracts," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 28(1), pages 37-56, February.
    21. Alan Collins & Antonello E. Scorcu & Roberto Zanola, 2009. "Distribution conventionality in the movie sector: an econometric analysis of cinema supply," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 517-527.
    22. Chris Hand, 2002. "The Distribution and Predictability of Cinema Admissions," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 26(1), pages 53-64, February.
    23. Liran Einav, 2007. "Seasonality in the U.S. motion picture industry," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 127-145, March.
    24. Victor Fernandez-Blanco & Luis Orea & Juan Prieto-Rodriguez, 2013. "Endogeneity and measurement errors when estimating demand functions with average prices: an example from the movie market," Empirical Economics, Springer, vol. 44(3), pages 1477-1496, June.
    25. Gil, Ricard, 2007. ""Make-or-buy" in movies: Integration and ex-post renegotiation," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 643-655, August.
    26. Darren Filson, 2005. "Dynamic Common Agency and Investment: The Economics of Movie Distribution," Economic Inquiry, Western Economic Association International, vol. 43(4), pages 773-784, October.
    27. Fernanda Gutiérrez-Navratil & Víctor Fernández-Blanco & Luis Orea Sánchez & Juan Prieto Rodríguez, 2017. "Do Movie Majors Really Collude? Indirect Evidence from Release Schedules," Hacienda Pública Española / Review of Public Economics, IEF, vol. 221(2), pages 9-31, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Steven F. Lehrer & Tian Xie, 2022. "The Bigger Picture: Combining Econometrics with Analytics Improves Forecasts of Movie Success," Management Science, INFORMS, vol. 68(1), pages 189-210, January.
    2. Georgios Alaveras & Estrella Gomez-Herrera & Bertin Martens, 2018. "Cross-border circulation of films and cultural diversity in the EU," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(4), pages 645-676, November.
    3. Jaedo Choi & Yun Jeong Choi & Minki Kim, 2017. "Vertical Foreclosure with Product Choice and Allocation: Evidence from the Movie Industry," Working papers 2017rwp-107, Yonsei University, Yonsei Economics Research Institute.
    4. Alexander Cuntz & Alessio Muscarnera & Prince C. Oguguo & Matthias Sahli, 2023. "IP assets and film finance - a primer on standard practices in the U.S," WIPO Economic Research Working Papers 74, World Intellectual Property Organization - Economics and Statistics Division.
    5. Fernanda Gutiérrez-Navratil & Víctor Fernández-Blanco & Luis Orea Sánchez & Juan Prieto Rodríguez, 2017. "Do Movie Majors Really Collude? Indirect Evidence from Release Schedules," Hacienda Pública Española / Review of Public Economics, IEF, vol. 221(2), pages 9-31, June.
    6. Darlene Chisholm & Víctor Fernández-Blanco & S. Abraham Ravid & W. David Walls, 2015. "Economics of motion pictures: the state of the art," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 1-13, February.
    7. Belvaux, Bertrand & Mencarelli, Rémi, 2021. "Prevision model and empirical test of box office results for sequels," Journal of Business Research, Elsevier, vol. 130(C), pages 38-48.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jordi McKenzie, 2023. "The economics of movies (revisited): A survey of recent literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 480-525, April.
    2. Darlene Chisholm & Víctor Fernández-Blanco & S. Abraham Ravid & W. David Walls, 2015. "Economics of motion pictures: the state of the art," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 1-13, February.
    3. Frederick Derrick & Nancy Williams & Charles Scott, 2014. "A two-stage proxy variable approach to estimating movie box office receipts," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(2), pages 173-189, May.
    4. Amanda S. King & John T. King & Michael Reksulak, 2017. "Signaling for access to high-demand markets: evidence from the US motion picture industry," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 41(4), pages 441-465, November.
    5. Jordi McKenzie, 2009. "Revealed word-of-mouth demand and adaptive supply: survival of motion pictures at the Australian box office," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 33(4), pages 279-299, November.
    6. Darren Filson & James H. Havlicek, 2018. "The performance of global film franchises: installment effects and extension decisions," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(3), pages 447-467, August.
    7. Allègre Hadida, 2010. "Commercial success and artistic recognition of motion picture projects," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(1), pages 45-80, February.
    8. Gaenssle Sophia & Budzinski Oliver & Astakhova Daria, 2018. "Conquering the Box Office: Factors Influencing Success of International Movies in Russia," Review of Network Economics, De Gruyter, vol. 17(4), pages 245-266, December.
    9. Jordi McKenzie, 2010. "Do 'African American' films perform better or worse at the box office? An empirical analysis of motion picture revenues and profits," Applied Economics Letters, Taylor & Francis Journals, vol. 17(16), pages 1559-1564.
    10. Hofmann, Julian & Clement, Michel & Völckner, Franziska & Hennig-Thurau, Thorsten, 2017. "Empirical generalizations on the impact of stars on the economic success of movies," International Journal of Research in Marketing, Elsevier, vol. 34(2), pages 442-461.
    11. Jordi McKenzie, 2010. "How do theatrical box office revenues affect DVD retail sales? Australian empirical evidence," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(3), pages 159-179, August.
    12. McKenzie, Jordi, 2013. "Predicting box office with and without markets: Do internet users know anything?," Information Economics and Policy, Elsevier, vol. 25(2), pages 70-80.
    13. Georgios Alaveras & Estrella Gomez-Herrera & Bertin Martens, 2018. "Cross-border circulation of films and cultural diversity in the EU," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(4), pages 645-676, November.
    14. Don M. Chance & Eric Hillebrand & Jimmy E. Hilliard, 2008. "Pricing an Option on Revenue from an Innovation: An Application to Movie Box Office Revenue," Management Science, INFORMS, vol. 54(5), pages 1015-1028, May.
    15. Fernanda Gutierrez-Navratil & Victor Fernandez-Blanco & Luis Orea & Juan Prieto-Rodriguez, 2014. "How do your rivals’ releasing dates affect your box office?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(1), pages 71-84, February.
    16. Ronny Behrens & Natasha Zhang Foutz & Michael Franklin & Jannis Funk & Fernanda Gutierrez-Navratil & Julian Hofmann & Ulrike Leibfried, 2021. "Leveraging analytics to produce compelling and profitable film content," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 45(2), pages 171-211, June.
    17. Fei Peng & Lili Kang & Sajid Anwar & Xue Li, 2019. "Star power and box office revenues: evidence from China," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 43(2), pages 247-278, June.
    18. Angela (Xia) Liu & Tridib Mazumdar & Bo Li, 2015. "Counterfactual Decomposition of Movie Star Effects with Star Selection," Management Science, INFORMS, vol. 61(7), pages 1704-1721, July.
    19. Judy Ma & Dongling Huang & M. Kumar & Andrei Strijnev, 2015. "The impact of supplier bargaining power on the advertising costs of movie sequels," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 43-64, February.
    20. Darlene C Chisholm, 2011. "Motion Pictures," Chapters, in: Ruth Towse (ed.), A Handbook of Cultural Economics, Second Edition, chapter 39, Edward Elgar Publishing.

    More about this item

    Keywords

    Cinema; Theatre elasticity; Box-office revenue; Movies’ life-cycle; Panel data analysis; D22; L82; Z10;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • Z10 - Other Special Topics - - Cultural Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jculte:v:39:y:2015:i:1:p:65-83. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.