analyzing the welfare impacts of full line forcing contracts theoretical investigations have examined both anti competitive and efficiency inducing rationales for vertical bundling making empirical evidence important to understanding its welfare implications we use an extensive dataset on full line forcing contracts between movie distributors and video retailers to empirically measure the impact of vertical bundling on welfare we identify and measure three primary effects of full line forcing contracts market coverage leverage and efficiency we find that bundling increases market coverage and efficiency but has little impact on one distributor s gaining leverage over another as a result we estimate that full line forcing contracts increased consumer and producer surplus in this application

financing as a marketing strategy this paper investigates the issues concerning a film producer that finances production costs not only by the conventional funding from an institutional investor but also by internet funding financing through the internet from so called netizen investors in internet funding netizen investors engage in word of mouth activities assuming that information asymmetry exists between the producer and investors we investigate how the internet funding size varies with the word of mouth effect the monitoring effect of the institutional investor and the bargaining power of the producer over investors when the producer has no bargaining power the internet funding size is determined by balancing the word of mouth effect with the monitoring effect by the institutional investment if there is no word of mouth effect there may be no internet funding because netizen investors interpret internet funding as an indicator of a negative profit when the producer has high bargaining power full internet funding is possible if the information asymmetry of the film quality is resolved we discuss how information asymmetry can be resolved by the monitoring of the film quality the producer s reputation or the insurance on investment returns our model helps to capture several interesting aspects of internet funding in the korean film industry

a parsimonious model for forecasting gross box office revenues of motion pictures the primary objective of this paper is to develop a parsimonious model for forecasting the gross box office revenues of new motion pictures based on early box office data the paper also seeks to provide insights into the impact of distribution policies on the adoption of new products the model is intended to assist motion picture exhibitor chains retailers in managing their exhibition capacity and in negotiating exhibition license agreements with distributors studios by allowing them to project the box office potential of the movies they plan to or currently exhibit based on early box office results it is also of interest to practitioners in other software industries e g music books cd roms where the distribution intensity is highly variable over the product life cycle and is an important determinant of new product adoption patterns the model and its extensions are of interest to academic researchers interested in modeling distribution effects in new product adoption as well as forecasters looking for ways to leverage historical data on related products to forecast the sales of new products we draw upon a queuing theory framework to conceptualize stochastically the consumer s movie adoption process in two steps the time to decide to see the new movie and the time to act on the adoption decision the parameter for the time to decide process captures the intensity of information intensity flowing from various information sources while the parameter for the time to act process is related to the delay created by limited distribution intensity and other factors our conceptualization extends existing new product forecasting models which assume that consumers act instantaneously on the motivating information they receive about the new product the resulting model is parsimonious yet it accommodates a wide range of adoption patterns in addition the stochastic formulation allows us to quantify the uncertainty surrounding the expected adoption pattern in the empirical testing we focus on the most parsimonious version of the modeling framework boxmod i a model that assumes stationarity with respect to the two shape parameters that characterize the adoption process the model produces fairly accurate early forecasts using at most the first three weeks of data for calibration and the predictive performance of the model compares favorably with benchmark models we propose extensions of the basic model that account for more realistic non stationary distribution intensity patterns including a wide release pattern that relies on intensive distribution and promotion and a platform release pattern that involves a gradual buildup of distribution intensity finally we present an adaptive weighing scheme that combines initial parameter estimates obtained from a meta analysis procedure with estimates obtained from early data to produce forecasts of box office revenues for a new movie when little or no box office data are available an important finding from the empirical testing is that motion picture box office revenue patterns display remarkable empirical regularity we find that there are only three classes of adoption patterns and these can all be represented within the basic model by using a two parameter exponential or erlang 2 probability distribution or a three parameter generalized gamma distribution we also find that cumulative box office revenues can be predicted with reasonable accuracy often within 10 of the actual using as little as two or three data points however our attempts to predict revenue patterns without any sales data meet with limited success while the scale parameter can be estimated reasonably well from a historical database of parameter values we find that it is considerably more difficult to predict the shape parameters using historical data the parsimony we seek in developing the model comes at the cost of several limiting assumptions we assume that the time to decide subprocess and the time to act subprocess are independent which may not be the case if decisions on continued exhibition by retailers are endogenously related to box office revenues over the life cycle in the basic model formulation we also assume that the time to act process can be represented by an exponential distribution which may not always be the case while we provide some empirical evidence to support these assumptions further research could relax these and other assumptions to enrich the basic model although this would entail some loss in parsimony

how video rental patterns change as consumers move online how will consumption patterns for popular and long tail products change when consumers move from brick and mortar to internet markets we address this question using customer level panel data obtained from a national video rental chain as it was closing many of its local stores these data allow us to use the closure of a consumer s local video store as an instrument breaking the inherent endogeneity between channel choice and product choice our results suggest that when consumers move from brick and mortar to online channels they are significantly more likely to rent niche titles relative to blockbusters this suggests that a significant amount of niche product consumption online is due to the direct influence of the channel on consumer behavior not just due to selection effects from the types of consumers who decide to use the internet channel or the types of products that consumers decide to purchase online this paper was accepted by pradeep chintagunta marketing

research on the motion picture industry state of the art and new directions off the beaten track away from theatrical release the motion picture industry has been subject of extensive academic research over the last decades however most scholars focused on the u s theatrical motion picture market the number of research activities regarding even more profitable release windows such as home video or television has been substantially lower although international distribution is essential for a motion picture project to break even there has been little significant re search on most other markets this paper aims at summarizing the current state of research on the motion picture industry particularly from marketing and management perspective revealing research gaps and proposing recommendations for future research endeavors therefore a three pillar scheme is developed to systemize previous findings research on intraorganizational decision making contractual relationships between national stakeholders and international market competition are differentiated since these insights are mainly derived from u s theatrical exhibition they can hardly be applied to other markets and exhibition windows thus potential research areas are identified to expand knowledge of posttheatrical and international markets

legitimacy in interlocal partnerships balancing efficiency and democracy this article answers the question of why interlocal partnerships are seen as a viable route to effective governance among local elites in norway co operation between local governments is often seen as a way of overcoming transaction costs increasing the quantity and quality of public service delivery even if it comes at the price of less transparent local democratic processes the analysis presented here shows that the legitimacy of interlocal partnerships is not only based on a perception of increased effectiveness in terms of direct policy outputs such partnerships are also based on a more general perception of increased decision making power specifically in relation to forces exogenous to the regional context in which such co operation is forged nevertheless the local elites perceptions are conditioned by regional and local contexts the article argues that demography perceptions of local governance and ideology matter when elites assess the importance of interlocal partnerships

vertical integration market foreclosure and consumer welfare in the cable television industry i examine the effects of vertical integration between programming and distribution in the cable television industry i assess the effects of ownership structure on program offerings prices and subscriptions and i compare consumer welfare across integrated and unintegrated markets the results of this analysis suggest two general conclusions first integrated operators tend to exclude rival program services suggesting that certain program services cannot gain access to the distribution networks of vertically integrated cable system operators second vertical integration does not harm and may actually benefit consumers because of the associated efficiency gains

vertical contracts in the video rental industry a large body of theoretical work has explored the channels through which vertical contracts can induce efficiency improvements however it is also important to study vertical contracts empirically in order to gain insight into the relative size of different types of efficiency gains in this paper i empirically analyse a contractual innovation in the vertically separated video rental industry prior to 1998 video stores obtained inventory from movie distributors using simple linear pricing contracts in 1998 revenuesharing contracts were widely adopted i investigate the effect of the introduction of revenue sharing contracts on firms profits and consumer welfare i analyse a new panel data set of home video retailers that includes information on individual retailers contract and inventory choices as well as rentals and contract terms for 246 movie titles and 6137 retailers in the u s during each week of 1998 and 1999 and the first half of 2000 a structural econometric model of firms behaviour is developed that describes the nature of firms contract choices estimates from this model indicate that both upstream and downstream profits increase by 10 under the revenue sharing contract for popular titles for less popular titles the effects can be even larger i also estimate that consumers benefit when revenue sharing contracts are adopted

first party content and coordination in two sided markets the strategic use of first party content by two sided platforms is driven by two key factors the nature of buyer and seller expectations favorable versus unfavorable and the nature of the relationship between first party content and third party content complements or substitutes platforms facing unfavorable expectations face an additional constraint their prices and first party content investment need to be such that low zero participation equilibria are eliminated this additional constraint typically leads them to invest more less in first party content relative to platforms facing favorable expectations when first and third party content are substitutes complements these results hold with both simultaneous and sequential entry of the two sides with two competing platforms incumbent facing favorable expectations and entrant facing unfavorable expectations and multi homing on one side of the market the incumbent always invests weakly more in first party content relative to the case in which it is a monopolist this paper was accepted by bruno cassiman business strategy

bose einstein dynamics and adaptive contracting in the motion picture industry audiences discover what films they like and spread the word information feedback produces bose einstein dynamics in the motion picture box office revenue distribution information cascades generate box office hits and flops the revenue distribution evolves recursively over the run as a mixture of the opening and a stochastic competition among films the motion picture run is decentralized adaptive and self organizing semistationary admission prices local information and contingency rich contracts match the film rental price and the supply of theatrical engagements to demand copyright 1996 by royal economic society

motion picture profit the stable paretian hypothesis and the curse of the superstar abstract this paper investigates the stable distribution as a model of profit in motion pictures the skew of this distribution and its paretian tails capture with great fidelity the statistics of the movies features of the business such as the nobody knows principle the curse of the superstar the angel s nightmare the instability of profit and the form of artist contracts follow from the properties of the stable distribution

auctions with constrained information blind bidding for motion pictures toward explaining why movie exhibitors have sought legislation requiring distributors to trade screen films before soliciting bids a simulation of a nash equilibrium in an auction suggests that without previews bidders may suffer losses i n expected utility this supports the hypothesis that risk aversion a nd competition render exhibitors unable to reduce their bids enough t o compensate fully for the dearth of information an error components model is used to analyze a unique industry dataset the results conf irm that a component of the bid is lower raising mean return while the variance of return is greater for blindly licensed films copyright 1988 by mit press

revenue sharing and vertical control in the video rental industry revenue sharing contracts in which retailers pay a royalty on sales to their suppliers are now widely used in the video rental industry we show that revenue sharing is valuable in vertically separated industries in which demand is either stochastic unpredictable or variable e g systematically declining downstream inventory is chosen before demand is realized and downstream firms engage in intrabrand competition unlike two part tariffs revenue sharing achieves the first best outcome by softening retail price competition without distorting retailers inventory decisions our theories are also consistent with trends in prices and availability following retailers adoption of revenue sharing contracts

a reply to a comment on is having more channels really better a model of competition among commercial television broadcasters liu et al liu y d s putler c b weinberg 2004 is having more channels really better a model of competition among commercial television broadcasters marketing sci 23 1 120 133 examine the television broadcast industry using a model in which profit maximizing broadcasters seek to gain viewers by choosing the type of program to offer and by spending money to set program quality allowing broadcasters to sell access to those viewers through inserted advertisements at a fixed rate per viewer wu and chou wu c s chou 2006 commentary on is having more channels really better a model of competition among commercial television broadcasters marketing sci 25 5 541 545 argue that the duopoly result for a certain range of the cost parameter in liu et al is not a pure strategy nash equilibrium they further propose some modifications to the original model to restore liu et al s results in this reply we demonstrate how a single strategy not included in the strategy space of the liu et al duopoly model leads to the difference between our analysis and that of wu and chou while we had intended to rule out this strategy the text was not entirely clear on this issue wu and chou s comment provides an opportunity to clarify the situation we provide both empirical and theoretical support for excluding this strategy which allows us to focus on the more plausible competitive situations in television broadcasting we also reply to wu and chou s other comments on several issues such as the relative importance of program type versus quality

a comment on is having more channels really better a model of competition among commercial television broadcasters this paper shows that the analysis of liu et al 2004 contains a substantive error the asserted pure strategy nash equilibrium leading to their theorems 1 and 2 is really not an equilibrium we show that in their model either pure strategy nash equilibria do not exist or unlike their asserted main result when a pure strategy equilibrium exists increasing the number of commercial television broadcasters does not result in lower quality programs possible modifications of liu et al s model that may help restore the desired result are discussed

the effect of local competition on admission prices in the u s motion picture exhibition market abstract this paper provides empirical evidence on the relationship between local market structure and the prices charged to consumers in the u s motion picture exhibition market i find that there is a statistically significant relationship between the geographic distribution of movie theaters in a market and the admission prices that they are able to charge however the magnitude of the price reducing effect of local competition appears to be economically modest moreover i find no evidence that increases in geographic concentration lead to increased adult admission prices the findings are directly relevant to merger policy in the industry and pertinent because of the dramatic changes in industry structure resulting from mergers that occurred during 2002 i conclude that the available evidence suggests that popular and governmental concerns about horizontal mergers in the industry leading to dramatically increased admission prices are likely misplaced

forecasting marketing mix responsiveness for new products abstract before a new product launch marketers need to infer how demand will respond to various levels of marketing mix variables to set an appropriate marketing plan a critical challenge in estimating marketing mix responsiveness from historical data is that the observed decisions were affected by private information possessed by managers about the heterogeneous effects of marketing mix variables on sales the authors refer to this as the slope endogeneity problem such endogeneity differs from the intercept endogeneity problem which has been widely acknowledged in the literature to correct for the slope endogeneity bias the authors develop a conceptually simple control function approach that is amenable to multiple endogenous variables and marketing mix carryover effects the method is applied to forecasting advertising responsiveness in the u s dvd market the results suggest that advertising responsiveness varies substantially across dvd titles and that estimated marketing mix elasticities w

moviemod an implementable decision support system for prerelease market evaluation of motion pictures in spite of the high financial stakes involved in marketing new motion pictures marketing science models have not been applied to the prerelease market evaluation of motion pictures the motion picture industry poses some unique challenges for example the consumer adoption process for movies is very sensitive to word of mouth interactions which are difficult to measure and predict before the movie has been released in this article we undertake the challenge to develop and implement moviemod a prerelease market evaluation model for the motion picture industry moviemod is designed to generate box office forecasts and to support marketing decisions for a new movie after the movie has been produced or when it is available in a rough cut but before it has been released unlike other forecasting models for motion pictures the calibration of moviemod does not require any actual sales data also the data collection time for a product with a limited lifetime such as a movie should not take too long for moviemod it takes only three hours in a consumer clinic to collect the data needed for the prediction of box office sales and the evaluation of alternative marketing plans the model is based on a behavioral representation of the consumer adoption process for movies as a macroflow process the heart of moviemod is an interactive markov chain model describing the macro flow process according to this model at any point in time with respect to the movie under study a consumer can be found in one of the following behavioral states undecided considerer rejecter positive spreader negative spreader and inactive the progression of consumers through the behavioral states depends on a set of movie specific factors that are related to the marketing mix as well as on a set of more general behavioral factors that characterize the movie going behavior in the population of interest this interactive markov chain model allows us to account for word of mouth interactions among potential adopters and several types of word of mouth spreaders in the population marketing variables that influence the transitions among the states are movie theme acceptability promotion strategy distribution strategy and the movie experience the model is calibrated in a consumer clinic experiment respondents fill out a questionnaire with general items related to their movie going and movie communication behavior they are exposed to different sets of information stimuli they are actually shown the movie and finally they fill outpostmovie evaluations including word of mouth intentions these measures are used to estimate the word of mouth parameters and other behavioral factors as well as the movie specific parameters of the model moviemod produces forecasts of the awareness adoption intention and cumulative penetration for a new movie within the population of interest for a given base marketing plan it also provides diagnostic information on the likely impact of alternative marketing plans on the commercial performance of a new movie we describe two applications of moviemod one is a pilot study conducted without studio cooperation in the united states and the other is a full fledged implementation conducted with cooperation of the movie s distributor and exhibitor in the netherlands the implementations suggest that moviemod produces reasonably accurate forecasts of box office performance more importantly the model offers the opportunity to simulate the effects of alternative marketing plans in the dutch application the effects of extra advertising extra magazine articles extra tv commercials and higher trailer intensity compared to the base marketing plan of the distributor were analyzed we demonstrate the value of these decision support capabilities of moviemod in assisting managers to identify a final plan that resulted in an almost 50 increase in the test movie s revenue performance compared to the marketing plan initially contemplated management implemented this recommended plan which resulted in box office sales that were within 5 of the moviemod prediction moviemod was also tested against several benchmark models and its prediction was better in all cases an evaluation of moviemod jointly by the dutch exhibitor and the distributor showed that both parties were positive about and appreciated its performance as a decision support tool in particular the distributor who has more stakes in the domestic performance of its movies showed a great interest in using moviemod for subsequent evaluations of new movies prior to their release based on such evaluations and the initial validation results moviemod can fruitfully and inexpensively be used to provide researchers and managers with a deeper understanding of the factors that drive audience response to new motion pictures and it can be instrumental in developing other decision support systems that can improve the odds of commercial success of new experiential products

timing of effort and reward three sided moral hazard in a continuous time model this paper studies a three sided moral hazard problem with one agent exerting up front effort and two agents exerting ongoing effort in a continuous time model the agents efforts jointly affect the probability of survival and thus the expected cash flow of the project in the optimal contract the timing of payments reflects the timing of effort payments for up front effort precede payments for ongoing effort several patterns are possible for the cash allocation between the two agents with ongoing effort in one case where the two agents face equally severe moral hazard they share the cash flow equally at each point of time in another case where the two agents have different severities of moral hazard their payments are sequential in a more general case the two agents with ongoing effort first receive the cash flow alternately with an increasing frequency of switches and then divide the cash flow at each point of time this study provides a framework for understanding a broad set of business contracting issues the characteristics suggested in the optimal contract help us analyze the causes of business failure such as the recent debacle of mortgage backed securities

the critical trade off identity assignment and box office success in the feature film industry researchers have begun to study markets that are structured in terms of an opposition between market identities in a manner akin to the role pairs analyzed in structural role theory in this paper we analyze the feature film market which came to have such a role structure by the mid 1990s by exploiting the contingency that pertains to the identity of newly released films and the intermediary function played by critics we assess the tendency for offerings to be assigned one or the other of the available market identitiesc independent or major an analysis of the box office success of 396 feature films released in 1997 shows that a film attracted a larger audience when critics who specialized in major releases reviewed the film and implicitly certified it as fit for the mass market such classification was particularly crucial for breaking out of the initial constraints set by theatrical exhibitors however while attaining a major identity was necessary for success in the mass market it was a handicap in penetrating the art house this trade off illustrates how market structures restrict identity in a manner akin that by which role structures place constraints on the identities available to individuals copyright 2003 oxford university press

customized bundle pricing for information goods a nonlinear mixed integer programming approach this paper proposes using nonlinear mixed integer programming to solve the customized bundle pricing problem in which consumers are allowed to choose up to n goods out of a larger pool of j goods prior work has suggested that this mechanism has attractive features for the pricing of information and other low marginal cost goods although closed form solutions exist for this problem for certain cases of consumer preferences many interesting scenarios cannot be easily handled without a numerical solution procedure in this paper we investigate the efficiency gains created by customized bundling over the alternatives of pure bundling or individual sale under different assumptions about customer preferences and firm cost structure as well as the potential loss of efficiency caused by pricing with incomplete information about consumer reservation values our analysis suggests that customized bundling enhances sellers profits and enhances welfare when consumers do not place positive values on all goods and that this consumer characteristic is much more important than the shape of the valuation distribution in determining the optimal pricing scheme we also find that customized bundling outperforms both pure bundling and individual sale in the presence of incomplete information and that customized bundling still outperforms other simpler pricing schemes even when exact consumer valuations are not known ex ante

measuring the business stealing cannibalization and market expansion effects of entry in the u s motion picture exhibition market using a large and comprehensive theater level database covering over 18 billion in theater revenues over a five year period i document the extent and nature of business stealing revenue cannibalization and market expansion that occurred during the height of the 1990 s boom in movie theater construction

invited commentary making sense of these million dollar babies rationale behind superstar profit participation contracts the article by eliashberg et al 2006 provides a comprehensive review of current research on the motion picture industry with a special focus on managerially relevant issues on the supply side it walks the readers through the three distinct stages in the movie value chain of production distribution and theatrical exhibition and it points out promising avenues of future research the contractual issues between talents and the stu

bundling subscription tv channels abstract i analyze a market such as a subscription tv market where multiple varieties of an excludable public good are traded in bundles here bundling is not due to a producer s desire to extract consumers surplus but due to economies of scope in distribution technology the paper studies the pricing and production decisions of a supplier as well as the impacts of certain regulations such as pure bundling or pure components pricing restrictions findings of interest are as follows a profit constrained welfare maximizer would use a pure bundling price system when costs are low and a mixed bundling price system when costs are high a private monopolist produces too few varieties a pure bundling restriction on a private monopolist may increase welfare and consumer surplus but a pure components restriction never increases them

when to exit a product evidence from the u s motion picture exhibition market when is it optimal for a multi product firm to exit a product we analyze strategic product exit using data on motion pictures exhibition choices in a major metropolitan first run market to estimate the survivor function for films at a given theatre this analysis indicates that a film s survival at a particular theatre is affected by intra firm relative performance and interfirm competitive pressures we find that theatres within chains avoid business stealing preliminary analysis further suggests that theatres compete for market share with neighboring theatres by increasing the time to exit when the competing theatre is owned by a different chain this abstract was borrowed from another version of this item

retailer entry conditions and wholesaler conduct the theatrical distribution of motion pictures abstract i add to the empirical literature on vertical contracting and wholesaler conduct by using retailer entry conditions to infer unobserved choice variables and equilibrium responses to prices and advertising after estimating the us demand for theatrical motion pictures from 1990 96 i apply these techniques to compare observed outcomes to predictions under various distributor conduct hypotheses while several caveats apply results indicate that the hypothesis of competition among distributors fails to describe advertising levels or aggregate payments of theaters to studios the hypothesis of some collusion among distributors however matches the data fairly well

using revenue sharing to implement flexible prices evidence from movie exhibition contracts movie exhibition contracts entail revenue sharing terms that go down with weeks since release we develop a simple model to show how the form of these contracts can be explained by the distributors desire to set flexible prices we then use detailed data on theater movie contracts in spain where we exploit the information available at the time of contracting for movies previously released in the u s and other movie and theater characteristics to show how the implications of our flexible pricing argument are supported in the data and differentiate our explanation from prior more standard risk sharing and moral hazard explanations

network or pay per view a welfare analysis the welfare effects of pay per view television and advertising supported networks are compared it is shown that pay per view television admits third degree price discrimination and may involve a large loss of consumer surplus

silverscreener a modeling approach to movie screens management managing the allocation of shelf space for new products is a problem of significant importance for retailers the problem is particularly complex for exhibitors the retailers in the motion picture supply chain because they face dynamic challenges given the short life cycles of movies the changing level of demand over time the scarcity of shelf space and the complex revenue sharing contract between the exhibitor and the distributor in the face of this complexity the aim of current research is to provide a structure for analyzing management problems of exhibitors in the movie industry using a mathematical programming approach and a fast but readily accessible algorithm we propose a decision support model silverscreener whose aim is to help exhibitors make effective and timely decisions regarding theater screens management the major objective is to help select and schedule movies for a multiple screens theater over a fixed planning horizon in such a way that the exhibitor s cumulative profit is maximized by treating the multiple screens as parallel machines and the movies as jobs we provide an analogy of the current problem to the parallel machine scheduling problem we formulate the resulting problem as an integer program we depart from the typical parallel machine scheduling problems by introducing the time indexed formulation that is particularly useful for solving the current problem an important distinction between the current problem and typical machine scheduling problems is that the present approach allows for the choice of which movies to play typically in machine scheduling all jobs have to be scheduled we provide various analyses of normative versus actual decision making based on publicly available data the developed model is readily implementable and appears to lead to improved profitability in different comparative cases through sensitivity analysis we demonstrate that the above results are robust to variations in various parameters of the problem the main findings and insights from the normative policy suggest the following 1 based on silverscreener s recommendations the exhibitor can achieve substantially higher cumulative profit 2 the improvement over actual decisions in terms of profitability appears to result from a combination of better selection and scheduling of the movies 3 the general structure of the exhibitor s normative decision is choose fewer right movies and run them longer we propose a two tier integrated application of the model to show how the model can be applied to realistic decisionmaking the first tier involves development of a movie selection plan to help the manager plan an entire season and bid for movies before the start of that season an ex ante revenue prediction scheme is developed based intuitively on a matching of the forthcoming movies with similar movies played in this theater previously if the forthcoming season s scheduling plan can be visualized as a two dimensional week by screen matrix then that matrix contains only empty cells before the first tier after a bid plan is developed the exhibitor can fill some of those empty cells the remaining empty cells represent slots which can be decided during the season by either extending movies the exhibitor booked before the season or by scheduling other movies which may become available later in the season this motivates the second tier adaptive scheduling approach of the integrated approach the second tier helps the exhibitor in weekly decision making during the season this application involves rolling and updating data from one time window to another the approaches followed in the two tiers of the integrated application are quite general in that they can incorporate a sophisticated demand prediction model managerial judgments or a combination of both we also propose an alternative behavioral decision rule heuristic which exemplifies relationship dilemmas in the movie industry this heuristic shows that the exhibitors need to be selective in their choice of movies and may suffer a substantial loss in profitability if they place too much emphasis on accommodating distributors

waterfall versus sprinkler product launch strategy influencing the herd a seller decides the price and sequence in which a product of unknown value is introduced to consumers consumers inspect the product before consumption and observe past prices and sales consumption at a high price is informative for later consumers as it indicates that the product is likely to be of high value i show that on an average prices decrease over time however expected revenue on an average rises over time for a high enough discount factor i find that for extreme beliefs the firm introduces the product to all consumers but for intermediate values the product is introduced only to one consumer

platform competition with must have components in platform component systems with indirect network effects some must have components are so popular with consumers that they create large discrete indirect network effects when they become available on a platform for example espn is a must have component of cable tv platforms this paper examines how platform market structures determine exclusive versus non exclusive contracts between platforms and components it shows that a component provider is more likely to sign exclusive contracts with a single platform if its popularity is high the platform market share difference is large and cross platform indirect network effects are low

what s an oscar worth this article examines the impact of an academy award nomination and award for best picture best actor actress and best supporting actor actress on a film s i market share of theaters ii average revenue per screen and iii its probability of survival the model is estimated using weekly box office data for a matched sample of nominated and non nominated films the results indicate substantial financial benefits for a nomination and award for best picture and best actor actress the structure of rewards is consistent with that found in two stage single elimination tournaments

bundling with customer self selection a simple approach to bundling low marginal cost goods with declining costs of distributing digital products comes renewed interest in strategies for pricing goods with low marginal costs in this paper we evaluate customized bundling a pricing strategy that gives consumers the right to choose up to a quantity m of goods drawn from a larger pool of n different goods for a fixed price we show that the complex mixed bundle problem can be reduced to the customized bundle problem under some commonly used assumptions we also show that for a monopoly seller of low marginal cost goods this strategy outperforms individual selling m 1 and pure bundling m n when goods have a positive marginal cost or when customers have heterogeneous preferences over goods comparative statics results also show that the optimal bundle size for customized bundling decreases in both heterogeneity of consumer preferences over different goods and marginal costs of production we further explore how the customized bundle solution is affected by factors such as the nature of distribution functions in which valuations are drawn the correlations of values across goods and the complementarity or substitutability among products altogether our results suggest that customized bundling has a number of advantages both in theory and practice over other bundling strategies in many relevant settings

a blueprint for success in the us film industry this article analyses motion picture box office gross revenue using a cross section of films from 1997 to 2001 the dependent variable is total domestic box office revenue the independent variables investigated include production budget peak number of screens that the film was shown on in theaters consumer price index for movie tickets personal income season and year of the release in theaters a measure of pre existing audience aggregate critic rating mpaa rating genre word of mouth recommendation the presence of popular stars and the award nominations a distinction is made in the analysis between information available to the public prior to the release of the film in theaters ex ante and information available to the public after the film opens in theaters ex post results for the ex ante ordinary least squares ols regression reveal positive impacts of budget summer and holiday release dates critical reviews sequels and several genres on gross revenue significant positive determina

dynamic pricing for subscription services this paper investigates the use of pricing schemes in subscription services that consist of various combinations of activation subscription and cancellation fees when customers exclusively consider what is directly perceivable the activation fee starts low and increases as the network grows penetration strategy whereas the cancellation fee starts high and decreases as the network grows skimming strategy the activation and cancellation fees take various other forms otherwise the subscription fee remains low at the early stages and increases only when a reasonable number of subscribers is secured finally the authors discuss the theoretical and managerial implications of their findings