Price and delay decisions for sequentially released products: The case of transactional streaming services

Abstract

This research examines how the adjustment of price and delay in the sequential distribution of simultaneously available digital products can maximize revenues. In this dynamic digital market, consumers can choose between different versions of movies that are available after their initial theatrical release. An analysis of weekly sales data of 1,397 movies with more than 50,000 observations, in a random effect control function generalized least square panel model, reveals an inverted U-shaped delay effect. That is, too short and too long delays after the initial cinematic release are both suboptimal. Price and delay interact positively with each other too, such that if the delay is too short, the negative influence of the price becomes amplified. By testing the effects of multiple other success factors, some of which have not been investigated before, this research also reveals pertinent, novel interactions of these variables with price and delay. Finally, to encourage the practical application of these comprehensive results, the authors present an interactive dashboard that managers can use to simulate the optimal price and delay for the different product versions.