Inter-temporal Movie Distribution Based On Strategic Consumers

Since2010, China’s movie box office receipts have soared. However, China’s film industry is faced with many challenges and problems. Especially the movie box office accounts for80%of the film industry revenues, which reflects insufficient exploit of the film value. Throughout the American film industry, box office receipts account for only20%-30%, while nearly80%of its revenue comes from extended window and derivatives. How to develop new channel of movie distribution except the cinema and increase the revenue from movie derivatives? Participants in the film industry should pay more attention to this question. With the rapid development of the Internet, popularization of the mobile intelligent device such as mobile phones, tablets and the protection of film copyright, video websites become popular. Research on this new channel of movie distribution can provide some suggestions for exploiting the film’s value, extending the film life cycle and increasing the income of the producer.In this paper, we introduce the supply chain management theory into the decision-making process of producer and study distribution strategy under the competing dual-channel supply chains. First of all, market segmentation can be deduced based on the theory of strategic consumers. According to the demand of different channels, we use game theory to analyze producer’s release strategy under four combinations formed by two supply chain structures and two copyright trading modes. There are three participants in the supply chain:producer, theater, video website. In the centralized supply chain, the producer and theaters belong to the same company and are independent of the video web site. In the decentralized supply chain, producer, theater, video website respectively belong to different companies. Film copyright trading mode is determined by the producer:lump-sum payment of film royalty or box-office profit sharing. Secondly, according to the game theory, determine each step of the game in the four models to solve the optimal decisions including versions, cyber window and prices and analyze these results.The research is guided by the following research questions:1) How do different supply chain structures affect the decision-making of producer?2) How to determine the optimal cyber window, namely when to release the cyber version?3) Which trading mode of copyright should the producer adopt when releasing a cyber-version?The main findings are as followed:1) In centralized supply chains, producers will not release the cyber-version with revenue sharing trading mode of copyright.2) With lump-sum payment of film royalty, producers will release the cyber-version. In centralized supply chain, producer will release the cyber-version later and earn more profits than in the decentralized structure supply chain.3) Producer will release the cyber-version earlier with larger quality ratio as well as more royalty, while cyber-version release time will be delayed with higher quality and higher sharing proportion of box office revenue.4) When the film quality is low, producer will earn more with lump-sum payment of film royalty than without releasing cyber-version.According to the results and analysis, it is recommended that producer should determine cyber window flexibly on the basis of the investment, feature of the film, target customers.