Publication Type

Journal Article

Version

acceptedVersion

Publication Date

8-2018

Abstract

We study the market for new (movie) DVDs in the United States. Our demand model captures seasonality, freshness (i.e., time between theatrical and DVD release), and state dependence. We also develop a structural model of dynamic competition in which studios balance waiting for high-demand weeks, against reduced freshness, and against competitive crowding. We find that studios emphasize DVD revenues from larger movies (by theatrical revenue) over DVD revenues from smaller movies. Studios also emphasize revenue from consumers who prefer larger and fresher movies. These behaviors are consistent with managerial conservatism: studio executives forgo DVD revenues from smaller movies to ensure the DVD success of larger movies.

Keywords

dynamic competition, time-nonhomogeneous Markov perfect equilibrium, release timing, motion picture industry, managerial conservatism

Discipline

Marketing | Sales and Merchandising

Research Areas

Marketing

Publication

Management Science

Volume

64

Issue

8

First Page

3536

Last Page

3553

ISSN

0025-1909

Identifier

10.1287/mnsc.2017.2795

Publisher

INFORMS (Institute for Operations Research and Management Sciences)

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1287/mnsc.2017.2795

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