Strategic decision-making in Hollywood release gaps

Abstract

Hollywood blockbusters are usually released in the U.S. before other foreign markets. The release gaps have declined significantly over time and varied greatly across countries. While movie piracy has been suggested as an important determinant for the release gap decision of distributors, theory and evidence suggest there are other important determinants. In this paper, we use a discrete choice release gap decision game model to disentangle the impacts of the i) release gap effect, which includes factors that provide incentives for a distributor to shorten the release gap; ii) word-of-mouth effect, which provides incentives for a distributor to lengthen the release gap; and iii) strategic effect, which accounts for the incentives blockbusters have to avoid each other. We obtain box office and release gap data from the private industry source Boxofficemojo.com. Our results suggest all three factors have an economically significant impact on distributors' release gap decision.JEL Classification: F14, L82, 034

Do American Critic Reviews Affect Film Consumption Abroad? The Brazilian Case

“…Regarding the user/consumer reviews, we find a predominantly positive effect on films released with a gap in line with Dalton and Leung (2017), who observe that WOM incentivizes a more prolonged gap release because it accumulates information about film quality. This prediction effect suggests that narrowly released films of good quality can take advantage of the consumer reviews (and of the expert reviews as well) to generate WOM (and publicity) as a good marketing strategy, making the film's quality known before its consumption.…”

“…Regarding the American WOM effect on the Brazilian film market, similar to Dalton and Leung (2017), we documented significance for both types of releases, simultaneous or gapped, suggesting both effects: the influence in wide/simultaneous releases and prediction in narrow/gapped releases.…”

“…Thus, reviews of consumers/users have become largely available and a relevant source of film quality information—along with experts’ critical reviews—due to Internet availability (Vujić & Zhang, 2018). Consumers utilize open online forums to share their opinions about films (Basuroy et al, 2020; Moretti, 2011; Souza et al, 2019), and these reviews can be seen as a proxy for word-of-mouth (WOM) (Dalton & Leung, 2017). In addition, with the recent evolution of social media, some users are also “influencers” that are supposed to guide consumption and other behaviors.…”

Strategic attractiveness and release decisions for cultural goods

“…The analyses of the optimal release window are either purely empirical or, if theoretical, they adopt a monopoly framework. A notable exception is Dalton & Leung (), who consider another strategic determinant of the choice of release window, namely, the incentive for studios to avoid releasing blockbusters at the same dates…”

The economics of movies (revisited): A survey of recent literature

“…If the film is released in international markets, consideration also has to be given to the timing of the international release relative to the domestic market (Cabral & Natividad, 2020; Dalton & Leung, 2017). In many instances, a studio may also undertake focus groups to help fine tune the marketing campaign, with increasingly sophisticated methods including neuro‐analysis (Barnett & Cerf, 2017), live comments listening (Zhang et al., 2020), and other analytics available as a result of big data (Behrens et al., 2021).…”