Abstract
Motion picture companies are increasingly providing movies online. We develop a model to examine optimal distribution strategies for the movie studio. The studio can release the movie through the traditional channel (i.e. theatre) or online channel and has to decide the distribution strategy. When the studio is vertically integrated with the exhibitor, our results indicate that in the presence of a relatively low cost of using a traditional channel, the dual-channel strategy exists and generates the highest profit. However, when the cost is relatively high, the online channel strategy becomes the best strategy. When the studio is not vertically integrated with the exhibitor, when the studio’s commission share is low, the studio will adopt the dual-channel strategy if the traditional channel cost is low and the quality difference is large. If not, the studio will adopt the online channel strategy. When the studio’s commission share is moderate, the studio will adopt the dual-channel strategy if the traditional channel cost is low and the quality difference is large, the studio will adopt the dual-channel strategy if the traditional channel cost is low and the quality difference is moderate, otherwise, the studio will adopt the online channel strategy. When the studio’s commission share is large, the studio has more motivation to adopt traditional strategy.
Highlights
The supply chain of movie products is composed as follows: content providers, movie studios and channel vendors, which correspond to the production, distribution, and screening of movie products
We aim to address the following research questions, namely, which channel strategy is optimal for distributing movie products when the studio is vertically integrated with the exhibitor, and which channel
We have presented a model of movie distribution and consumption across two channels that provide insights on how studios should make optimal distribution decisions
Summary
With the advent of the Internet, a dramatic change has taken place in how movie studios manage film distribution It is increasingly popular for movie studios to provide their movie product to customers directly through the Internet, a channel strategy referred to as an online channel strategy. With the continuous advancement of digital technology, exhibitors can display movie products through traditional theatres, and can be screened through various media such as the internet, television, mobile phones, and DVDs. In this paper, for the convenience of research, first of all, in terms of channels, it means that movie products are only shown through traditional channels and online channels. We aim to address the following research questions, namely, which channel strategy is optimal for distributing movie products when the studio is vertically integrated with the exhibitor, and which channel.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
