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Optimal Distribution Strategy for Movie Product

Received: 22 November 2019     Published: 3 February 2020
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Abstract

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.

Published in International Journal of Economics, Finance and Management Sciences (Volume 8, Issue 1)
DOI 10.11648/j.ijefm.20200801.14
Page(s) 31-38
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Movie Studio, Exhibitor, Movie Distribution Channel, Dual Channel

References
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[5] Cattani K, Gilland W, Heese H S, et al. Boiling frogs: Pricing strategies for a manufacturer adding a direct channel that competes with the traditional channel [J]. Production and Operations Management, 2006, 15 (1): 40.
[6] Hua G, Wang S, Cheng T C E. Price and lead time decisions in dual-channel supply chains [J]. European journal of operational research, 2010, 205 (1): 113-126.
[7] Kurata H, Yao D Q, Liu J J. Pricing policies under direct vs. indirect channel competition and national vs. store brand competition [J]. European Journal of Operational Research, 2007, 180 (1): 262-281.
[8] Radhi M, Zhang G. Pricing policies for a dual-channel retailer with cross-channel returns [J]. Computers & Industrial Engineering, 2018, 119: 63-75.
[9] Rahmani K, Yavari M. Pricing policies for a dual-channel green supply chain under demand disruptions [J]. Computers & Industrial Engineering, 2019, 127: 493-510.
[10] Eliashberg J, Elberse A, Leenders MA (2006) The motion picture industry: Critical issues in practice, current research, and new research directions. Marketing Sci. 25 (6): 638–661.
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[16] Mortimer JH. 2007. “Price discrimination, copyright law, and technological innovation: Evidence from the introduction of DVDs,” The Quarterly journal of economics (122: 3), August, pp 1307–1350.
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  • APA Style

    Jingpei Ma, Wenli Li. (2020). Optimal Distribution Strategy for Movie Product. International Journal of Economics, Finance and Management Sciences, 8(1), 31-38. https://doi.org/10.11648/j.ijefm.20200801.14

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    ACS Style

    Jingpei Ma; Wenli Li. Optimal Distribution Strategy for Movie Product. Int. J. Econ. Finance Manag. Sci. 2020, 8(1), 31-38. doi: 10.11648/j.ijefm.20200801.14

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    AMA Style

    Jingpei Ma, Wenli Li. Optimal Distribution Strategy for Movie Product. Int J Econ Finance Manag Sci. 2020;8(1):31-38. doi: 10.11648/j.ijefm.20200801.14

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  • @article{10.11648/j.ijefm.20200801.14,
      author = {Jingpei Ma and Wenli Li},
      title = {Optimal Distribution Strategy for Movie Product},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {8},
      number = {1},
      pages = {31-38},
      doi = {10.11648/j.ijefm.20200801.14},
      url = {https://doi.org/10.11648/j.ijefm.20200801.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20200801.14},
      abstract = {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.},
     year = {2020}
    }
    

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  • TY  - JOUR
    T1  - Optimal Distribution Strategy for Movie Product
    AU  - Jingpei Ma
    AU  - Wenli Li
    Y1  - 2020/02/03
    PY  - 2020
    N1  - https://doi.org/10.11648/j.ijefm.20200801.14
    DO  - 10.11648/j.ijefm.20200801.14
    T2  - International Journal of Economics, Finance and Management Sciences
    JF  - International Journal of Economics, Finance and Management Sciences
    JO  - International Journal of Economics, Finance and Management Sciences
    SP  - 31
    EP  - 38
    PB  - Science Publishing Group
    SN  - 2326-9561
    UR  - https://doi.org/10.11648/j.ijefm.20200801.14
    AB  - 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.
    VL  - 8
    IS  - 1
    ER  - 

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Author Information
  • School of Economics and Management, Dalian University of Technology, Dalian, China

  • School of Economics and Management, Dalian University of Technology, Dalian, China

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