When It Pays to Wait: Optimizing Release Timing Decisions for Secondary Channels in the Film Industry

Abstract

This study examines the optimization of interrelease timing decisions, focusing on box office and DVD sales in the U.S. motion picture industry. It aims to improve managerial decision making by jointly modeling the revenue in these two channels through a copula modeling approach. As in previous studies, the authors find that the time lag from box office release to DVD release should be increased to optimize total movie performance, but they conclude that previous studies have systematically underestimated the optimal time lag. This study is the first to challenge the assumption of a negative decay in DVD performance as a function of time; its results suggest that a delayed DVD release is still optimal for maximizing revenue in the DVD channel. This study's model suggests that, on average, individual movies are approximately eight weeks away from their optimal lag and that the net impact of optimizing would be improvements in total and DVD revenue by 2.5% and 5.6%, respectively. Therefore, this model is expected to enhance managerial decision making by offering the ability to predict the optimal time lag for individual movies.