International Journal of Economics, Finance and Management Sciences
Volume 8, Issue 1, February 2020, Pages: 31-38
Received: Jan. 31, 2020;
Published: Feb. 3, 2020
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Jingpei Ma, School of Economics and Management, Dalian University of Technology, Dalian, China
Wenli Li, School of Economics and Management, Dalian University of Technology, Dalian, China
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.
Optimal Distribution Strategy for Movie Product, International Journal of Economics, Finance and Management Sciences.
Vol. 8, No. 1,
2020, pp. 31-38.
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