The 'Summer' Blockbuster That Debuts in March
by: Ben Fritz
Apr 01, 2015
Click here to view the full article on WSJ.com
TOPICS: Game Theory
SUMMARY: What makes a "summer" movie? As Hollywood churns out more big-budget "tentpoles," a packed calendar from May-to-August means more such films are being released in March and April. The article makes several interesting points about the economics of movie release dates. First, as more movies are crammed into the summer months, studios will push "tentpole" movies into less-popular movie-going times. Second, the exhibition industry prefers to spread releases out more evenly throughout the year than do the movie studios. Third, the summer months are a popular release time in part because kids are off from school and can go to movies during weekdays.
CLASSROOM APPLICATION: Students can examine optimal release dates and the game played by studios in choosing release dates.
QUESTIONS:
1. (Advanced) Suppose the revenue per movie during the summer months as a function of the number of movies exhibited during these months, x_s, is 200-5*x_s; and the revenue per movie during winter months as a function of the number of movies during these months, x_w, is 100-5*x_w. Two studios, A and B, must decide number of films to release during the summer months, x_sA and x_sB respectively, and number to release during the winter months, x¬_wA and x_wB respectively. Each studio has a total of 20 films to release. In a game in which the studios simultaneously decide release periods, what is the Nash equilibrium number of films released during the summer months?
2. (Advanced) Why are studios packing more movies into the summer months and at the same time releasing more "tentpole" movies in the early spring?
3. (Introductory) Why does the movie exhibition industry prefer to spread releases out more evenly throughout the year than do the studios?
by: Ben Fritz
Apr 01, 2015
Click here to view the full article on WSJ.com
TOPICS: Game Theory
SUMMARY: What makes a "summer" movie? As Hollywood churns out more big-budget "tentpoles," a packed calendar from May-to-August means more such films are being released in March and April. The article makes several interesting points about the economics of movie release dates. First, as more movies are crammed into the summer months, studios will push "tentpole" movies into less-popular movie-going times. Second, the exhibition industry prefers to spread releases out more evenly throughout the year than do the movie studios. Third, the summer months are a popular release time in part because kids are off from school and can go to movies during weekdays.
CLASSROOM APPLICATION: Students can examine optimal release dates and the game played by studios in choosing release dates.
QUESTIONS:
1. (Advanced) Suppose the revenue per movie during the summer months as a function of the number of movies exhibited during these months, x_s, is 200-5*x_s; and the revenue per movie during winter months as a function of the number of movies during these months, x_w, is 100-5*x_w. Two studios, A and B, must decide number of films to release during the summer months, x_sA and x_sB respectively, and number to release during the winter months, x¬_wA and x_wB respectively. Each studio has a total of 20 films to release. In a game in which the studios simultaneously decide release periods, what is the Nash equilibrium number of films released during the summer months?
2. (Advanced) Why are studios packing more movies into the summer months and at the same time releasing more "tentpole" movies in the early spring?
3. (Introductory) Why does the movie exhibition industry prefer to spread releases out more evenly throughout the year than do the studios?
Reviewed By: James Dearden, Lehigh University
Label: Game theory
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