The impact of early DVD release on box office revenues

Abstract

In recent years, film studios have accelerated the release of films on DVDs, prompting theatre owners to express concerns about the possible negative impact of the early release of DVDs on a film's box office revenues. This study examines the impact of releasing a film on DVD before the film ends its theatrical run. Based on a sample of the top 50 grossing films in the USA over the period 2001 to 2005, our results indicate that roughly a quarter of the films appear on DVD before exiting the theatres, and that studios release these films on DVD after they have been in the theatres for an average of 20 weeks. By delaying the DVD release until the twentieth week, studios minimize the impact on box office revenues, as the average films take in 95% of its total box office growth by the seventh week in distribution. Regression results indicate that an early DVD release reduces box office revenues by 46%, or $303 989, which represents an average of 0.21% of a film's total box office revenue.