This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by Elberse, A. Articles by Eliashberg, J. Search for Related Content

Demand and Supply Dynamics for Sequentially Released Products in International Markets: The Case of Motion Pictures

Harvard Business School, Morgan Hall, Soldiers Field, Boston, MA 02163
University of Pennsylvania, 700 Jon M. Huntsman Hall, 3730 Walnut Street, Philadelphia, Pennsylvania 19104–6340
aelberse{at}hbs.edu
eliashberg{at}wharton.upenn.edu

We develop an econometric model to study a setting in which a new product is launched first in its domestic market and only at a later stage in foreign markets, and where the product's performance ("demand") and availability ("supply") are highly interdependent over time within and across markets. Integrating literature on international diffusion, "success–breeds–success" trends, and the theatrical motion picture industry—the focus of the empirical analysis—we develop a dynamic simultanenous–equations model of the drivers and interrelationship of the behavior of consumers ("audiences") and retailers ("exhibitors"). Our findings emphasize the importance of considering the endogeneity and simultaneity of audience and exhibitor behavior, and challenge conventional wisdom on the determinants of box office performance (which is predominantly based on modeling frameworks that fail to account for the interdependence of performance and availability). Specifically, we find that variables such as movie attributes and advertising expenditures, which are usually assumed to influence audiences directly, mostly influence revenuesindirectly, namely through their impact on exhibitors' screen allocations. In addition, consistent with the idea that the "buzz" for a movie is perishable, we find that the longer is the time lag between releases, the weaker is the relationship between domestic and foreign market performance—an effect mostly driven by foreign exhibitors' screen allocations.

Key Words: Dynamic Simultaneous Equations Modeling; International Release Strategies; Entertainment Marketing; Motion Picture Distribution and Exhibition; Channel Management

This article has been cited by other articles:

				R. Gil and W. R. Hartmann Empirical Analysis of Metering Price Discrimination: Evidence from Concession Sales at Movie Theaters Marketing Science, November 1, 2009; 28(6): 1046 - 1062. [Abstract] [PDF]

				O. Horverak Research Note--Wine Journalism--Marketing or Consumers' Guide? Marketing Science, May 1, 2009; 28(3): 573 - 579. [Abstract] [PDF]

				A. M. Joshi and D. M. Hanssens Movie Advertising and the Stock Market Valuation of Studios: A Case of "Great Expectations?" Marketing Science, March 1, 2009; 28(2): 239 - 250. [Abstract] [PDF]

				M. B. Ataman, C. F. Mela, and H. J. van Heerde Building Brands Marketing Science, November 1, 2008; 27(6): 1036 - 1054. [Abstract] [PDF]

				D. M. Chance, E. Hillebrand, and J. E. Hilliard Pricing an Option on Revenue from an Innovation: An Application to Movie Box Office Revenue Management Science, May 1, 2008; 54(5): 1015 - 1028. [Abstract] [PDF]

				G. Gemser, M. A. A. M. Leenders, and N. M. Wijnberg Why Some Awards Are More Effective Signals of Quality Than Others: A Study of Movie Awards{dagger} Journal of Management, February 1, 2008; 34(1): 25 - 54. [Abstract] [PDF]

				J. Eliashberg, A. Elberse, and M. A.A.M. Leenders The Motion Picture Industry: Critical Issues in Practice, Current Research, and New Research Directions Marketing Science, November 1, 2006; 25(6): 638 - 661. [Abstract] [PDF]

				L. Wei Invited Commentary--Making Sense of These Million-Dollar Babies--Rationale Behind Superstar Profit Participation Contracts Marketing Science, November 1, 2006; 25(6): 678 - 680. [Abstract] [PDF]

				J. Hauser, G. J. Tellis, and A. Griffin Research on Innovation: A Review and Agenda for Marketing Science Marketing Science, November 1, 2006; 25(6): 687 - 717. [Abstract] [PDF]

				T. Hennig-Thurau, M. B. Houston, and G. Walsh The Differing Roles of Success Drivers Across Sequential Channels: An Application to the Motion Picture Industry Journal of the Academy of Marketing Science, October 1, 2006; 34(4): 559 - 575. [Abstract] [PDF]

				A. Ainslie, X. Dreze, and F. Zufryden Modeling Movie Life Cycles and Market Share Marketing Science, January 1, 2005; 24(3): 508 - 517. [Abstract] [PDF]

				S. Stremersch and P. C. Verhoef Globalization of Authorship in the Marketing Discipline: Does It Help or Hinder the Field? Marketing Science, January 1, 2005; 24(4): 585 - 594. [Abstract] [PDF]

				R. E. Krider, T. Li, Y. Liu, and C. B. Weinberg The Lead-Lag Puzzle of Demand and Distribution: A Graphical Method Applied to Movies Marketing Science, January 1, 2005; 24(4): 635 - 645. [Abstract] [PDF]

				S. M. Shugan Endogeneity in Marketing Decision Models Marketing Science, January 1, 2004; 23(1): 1 - 3. [Abstract] [PDF]

				P. S. Fader, B. G. S. Hardie, and C.-Y. Huang A Dynamic Changepoint Model for New Product Sales Forecasting Marketing Science, January 1, 2004; 23(1): 50 - 65. [Abstract] [PDF]

				P. N. Golder and G. J. Tellis Growing, Growing, Gone: Cascades, Diffusion, and Turning Points in the Product Life Cycle Marketing Science, January 1, 2004; 23(2): 207 - 218. [Abstract] [PDF]

				S. M. Shugan The Impact of Advancing Technology on Marketing and Academic Research Marketing Science, January 1, 2004; 23(4): 469 - 475. [Abstract] [PDF]

				C. Van den Bulte and S. Stremersch Social Contagion and Income Heterogeneity in New Product Diffusion: A Meta-Analytic Test Marketing Science, January 1, 2004; 23(4): 530 - 544. [Abstract] [PDF]