Study finds benefit to simultaneous release
Researchers say studio revenue would increase with same-day DVD/theatrical debut
By Jennifer Netherby -- Video Business, 2/27/2007
FEB. 27 | Releasing a movie simultaneously in theaters and on DVD could boost studio revenue, according to a new study by a group of international researchers.
The report, “The Last Picture Show? Timing and Order of Movie Distribution,” found that studios stand to gain a 16% increase in revenue in the U.S. if they release films in theaters, on rental DVD and video-on-demand at the same time, followed three months later by a DVD sell-through release. Though studios would benefit from increased revenue under the scenario, theaters stand to lose. Theatrical revenue would fall by 40%, researchers predict.
The study, done by marketing professors in Germany, the U.K. and the U.S., will be published in the October issue of Journal of Marketing. Researchers included professors and doctorate students from the University of Hamburg and Bauhaus University in Germany, Case Business School in the U.K. and the University of Missouri in the U.S.
Researchers studied data from 1,770 consumers in the U.S., Japan and Germany to study how theatrical, DVD and VOD revenue for films have shifted and how different distribution scenarios would benefit studios.
The U.S. is the only country in which a simultaneous release would grow studio revenue. Researchers found that to boost revenue in Germany and Japan, studios would need to release movies for sale on DVD three months after their theatrical debut, followed by a DVD rental release and VOD release one year after the theatrical opening.
The theatrical business would grow in those countries under that scenario, but the video rental business would decline.
“We’re not advocating changes,” said Mark Houston, associate professor of marketing at the College of Business at the University of Missouri-Columbia. “We simply examined what would happen if there were changes to the distribution process by looking at it from the studio’s perspective, because the studios are the risk takers.”
Researchers found that in the U.S., studios could improve profit margins without reducing theater revenue by pushing back the DVD rental window and VOD window. Under that scenario, a film would first debut in theaters, followed three months later by a DVD sell-through debut with slightly higher pricing, followed three months later by the DVD rental and VOD release.
