Henning, Henrik Sattler, Felix Eggers, & Mark B. Houston
Executive Summary
The goal of this article is to identify sequential distribution configurations that maximize movie studio revenues. The approach used extends the existing academic literature in three ways. The authors (1) consider multiple channels that consumers face in reality (movie theater, DVD purchase, DVD rental, VOD over the Internet); (2) use individual-level discrete choice consumer data, which enables them to model potential market configurations, such as simultaneous releases in theaters and other channels (e.g., home video) whose economic appeal cannot be assessed by past market data; and (3) account for country differences by applying the model to three leading motion picture markets (the United States, Japan, and Germany).
The authors find that in the United States, film studios could increase revenues by more than 16% if films were simultaneously released in theaters, on rental DVD, and on VOD, with a three-month window to DVD retail. Video retailers could even gain approximately 50% higher revenues in such a scenario, whereas theaters and video rental chains stand to lose 40% and 15% of their annual revenues, respectively. Furthermore, revenue-optimizing structures differ strongly among countries. In both Germany and Japan, studios would need to release DVDs for retail three months after theater distribution and DVD rentals and VOD one year after theatrical screenings to maximize profits. Studio revenues would increase by 14% in Germany and 12% in Japan, and DVD retailer revenues would be boosted by 28% and 66% in these countries, respectively. Unlike in the United States, theaters would also benefit from such changes (with revenue increases of 15% and 6%, respectively), but the video rental business again would drop strongly.
The authors also isolate win–win-configurations of the sequential distribution chain in which every market participant gains revenues or at least does not lose any. The authors discuss several scenarios and their implications for movie studios and other motion picture industry players and critically reflect on potential barriers to an implementation of these novel distribution models. They conduct several sensitivity analyses, which, in general, demonstrate the robustness of the reported revenue-maximizing configurations.
Biography
Thorsten Hennig-Thurau (PhD, University of Hannover) is Professor of Marketing and Media Research at Bauhaus-University of Weimar's School of Media and Professor of Movie Marketing in the Film Business Academy at Cass Business School London. Dr. Hennig-Thurau has published articles in Journal of Marketing, Journal of the Academy of Marketing Science, Marketing Letters, Journal of Service Research, International Journal of Electronic Commerce, Journal of Interactive Marketing, Psychology & Marketing, and Journal of Consumer Affairs, among others. He is founder and director of the Weimar-based MovieSuccess Research Center and has done consulting work for various clients in the film industry. Dr. Hennig-Thurau has authored two books and is coeditor of the monograph Relationship Marketing, which has been translated into Chinese. He also is a member of the editorial board of three journals and serves as reviewer for Journal of Marketing and Marketing Science. Dr. Hennig-Thurau has won ten best-article and best-paper awards, including the Overall Best Paper Award of the 2005 AMA Summer Educators' Conference and the 2002 Journal of Service Research Excellence in Service Research Award. His research interests are in media marketing, services marketing, and customer relationships.
Victor Henning is a lecturer and doctoral student at the School of Media at Bauhaus-University of Weimar, where he conducts research on hedonic consumption and the motion picture industry. He has published articles and case studies in Journal of Marketing and Media, Culture & Society, at the European Case Clearing House, and in several invited book chapters. His research is funded by the German Federal Ministry of Education and Research through a doctoral dissertation scholarship from the Foundation of the German Economy and has been widely reported on in the news media (e.g., Financial Times, Variety, Screen International, The Hollywood Reporter, Frankfurter Allgemeine Zeitung, Die Welt, Wirtschaftswoche, Wiener Standard, Stern). At the 2005 AMA Summer Marketing Educators' Conference in San Francisco, he won the Overall Best Conference Paper Award and the Best Paper Award in the E-Commerce and Technology Track. Victor Henning is also a researcher at the Weimar-based MovieSuccess Center and has done consulting work for various companies in the film industry.
Henrik Sattler (PhD, University of Kiel) is Professor of Marketing and Management and head of the Institute of Marketing and Media, both at the University of Hamburg, Germany. His research interests include branding, pricing, measurement of consumer preferences, and innovation management. He has published four books and more than 60 articles in these fields, including Journal of Marketing, International Journal of Research in Marketing, Journal of Retailing, International Journal of Technology Management, and International Business Review. He was on sabbatical leave as a visiting research fellow at Cornell University, Massachusetts Institute of Technology, and Australian Graduate School of Management. Dr. Sattler has received several research awards (e.g., from the World Association of Research Professionals, German Brand Association), and he has done consulting work for various companies (e.g., PricewaterhouseCoopers, GfK, Unilever). In 2003, he founded the Center for Branding and Marketing at the University of Hamburg.
Felix Eggers is a doctoral student at the Institute of Marketing and Media at the University of Hamburg, Germany. He studied business administration and graduated with a diploma having a main emphasis on marketing, statistics, and information technology. His research focuses on the analysis of consumer preferences, especially conjoint measurement. In 2006, he spent several months as a visiting scholar at the Australian Graduate School of Management, Sydney.
Mark B. Houston (PhD, Arizona State University; MBA, University of Missouri; BS, Southwest Baptist University) is David and Judy O'Neal MBA Professor at the University of Missouri–Columbia. His research on innovation strategy, interfirm relationships, and motion picture success has been published in Marketing Science, Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, and Journal of Financial and Quantitative Analysis, among others. Dr. Houston received a 2006 Outstanding Marketing Teacher Award from the Academy of Marketing Science and a 2006 University of Missouri Provost Award for his work with University of Missouri's Crosby MBA program and its cross-disciplinary Integrated Functional Perspectives initiative. Dr. Houston cochaired the 2005 American Marketing Association Summer Educators' Conference and has served as vice president of the American Marketing Association's Technology and Marketing special interest group.
Journal of Marketing, Vol. 71, No. 4, October 2007
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