Strategic Promotion and Release Decisions for Cultural Goods

TitleStrategic Promotion and Release Decisions for Cultural Goods
Publication TypeWorking Paper
Year of Publication2015
AuthorsBelleflamme, P, Paolini, D
KeywordsMotion pictures, Non-price competition, Strategic promotion, Strategic timing

We study how producers of cultural goods can strategically increase their promotion budgets to secure the most profitable release dates for their goods. In a game-theoretic setting, where two producers choose their budget before simultaneously setting the release date of their good, we prove that two equilibria are possible: releases are either simultaneous (at the demand peak) or staggered (one producer delays). In the latter equilibrium, the first-mover secures its position by investing more in promotion. We test this prediction on a dataset of more than 1500 American movies released in ten countries over 13 years. Our empirical analysis confirms that higher budgets allow movie studios to move release dates closer to demand peaks.

Citation Key6527
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