Heterogeneous Preferences and Optimal Release Timing in the U.S. Film Industry

Date
2018-04-12
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Abstract

I develop and estimate a discrete choice structural model of demand to address the unique challenges of the domestic film industry. Then, using the model estimates, I setup the release date scheduling problem and solve for the optimal timing of release dates. The industry is marked by highly seasonal demand fluctuations and features products with clearly defined characteristics and short periods of viability. The model described herein, which is built upon the framework of BLP (1995), accounts for utility decay over time, seasonal effects, and heterogeneous consumer preferences over genre, MPAA rating, and critic reviews. I approximate the optimal instruments in a nonlinear setting, enabling the identification and precise estimation of the random coefficient parameters. These parameters shape characteristic-driven substitution patterns, a feature of the market largely ignored in past work. Using the model estimates, I identify the most over- and under-used markets in the industry by simulating the potential revenue of a hypothetical film across potential release dates. I find that the Christmas holiday season and the early portion of the year are often underutilized, while the fall markets are generally oversaturated. The paper concludes by constructing the film studios' release date scheduling problem and solving the inherent integer-programming problem. I find a restructured release schedule that increases revenue by 17% at the firm level.

Description
Degree
Doctor of Philosophy
Type
Thesis
Keywords
Heterogeneous Preferences, Random Coefficients, Demand Estimation, Film, Film Industry, Movies, Optimal Instruments
Citation

Copeland, Nicholas Marhsall. "Heterogeneous Preferences and Optimal Release Timing in the U.S. Film Industry." (2018) Diss., Rice University. https://hdl.handle.net/1911/105737.

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