- 29 Aug 2008
- Working Paper Summaries
Unraveling Yields Inefficient Matchings: Evidence from Post-Season College Football Bowls
Many market institutions have evolved to coordinate the timing of transactions and to prevent them from taking place too early or at uncoordinated times. In the case of post-season college football games, called "bowls," during the early 1990s the determination of which teams would play in which bowls was often made with several games still remaining to be played in the regular season. Practically speaking, this meant that the teams with the best end-of-season records might not play one another, because at the time the matchings were determined it wasn't yet known which teams these would be. Over the last decade, however, this market has undergone a number of reorganizations that have delayed this matching decision until the end of the regular season. For this working paper, the authors used Nielsen rating data on television viewership and the AP sportswriters' poll of team rankings to show that, by matching later, the chance of matching the best teams has increased, and the result is an increase in television viewership. Key concepts include: By matching bowl games later, the quality of the matched teams has improved, the likelihood of a championship game has increased, and the television viewership of all bowls in the late-matching consortia has increased. This paper may provide the first direct evidence and measurement of the inefficiency due to early transaction times in a naturally occurring market. Closed for comment; 0 Comments.
- 14 May 2008
- Research & Ideas
Getting Down to the Business of Creativity
Business leaders must manage and support creativity just as they would any other asset. Harvard Business School professors Teresa Amabile, Mary Tripsas, and Mukti Khaire discuss where creativity comes from, how entrepreneurs use it, and why innovation is often a team sport. From the HBS Alumni Bulletin. Key concepts include: People have their best days and do their best work when they are allowed to make progress. Whenever a firm introduces a truly novel product, suppliers, complementary producers, distribution channels, and consumers must often develop new capabilities, beliefs, and behaviors for the product to succeed, creating a challenge for the innovator. The perception exists that creative businesses can just start up, when in fact it takes a while for an entire ecosystem to actually generate an industry. Closed for comment; 0 Comments.
- 04 Dec 2007
- Working Paper Summaries
Dynamics of Platform Competition: Exploring the Role of Installed Base, Platform Quality and Consumer Expectations
What factors drive platform success, long-run market structure, and market efficiency? Conventional wisdom suggests that for a new platform to be successful, either it must make its technology compatible with the incumbent, or its technical advantage must offer so much value to consumers that it exceeds the combination of functionality, installed base, and complementary goods value offered by the incumbent. Zhu and Iansiti develop a dynamic model to examine the evolution of platform-based markets. They find that a huge quality advantage may not be necessary for an entrant to be successful. Using data from the video game industry, they find support for their theoretical predications. Key concepts include: A huge quality advantage may not be necessary for success. When market dynamics are driven by quality, a platform with a small quality advantage can also be successful. Xbox has a small quality advantage over Playstation 2 and the market dynamics are quality driven. These results help explain the successful entry of the Xbox console into this market and provide support for Zhu and Iansiti's theoretical model. Installed-base advantages do not necessarily provide a safety shield for the incumbent. To defend its leadership position, the incumbent needs to constantly enhance its quality. Closed for comment; 0 Comments.
- 31 Aug 2007
- Working Paper Summaries
Exclusivity and Control
Music, television shows, movies, Internet and mobile content, computer software, and other forms of media often require a consumer to join a platform in order to access or utilize the media. This affiliation may take the form of a subscription to a distribution channel or purchase of a hardware device. One of the primary means of differentiation and competition between platforms for consumer adoption is the acquisition of premium or quality content. However, whether or not certain content is exclusive to one platform or is present on multiple platforms varies significantly from industry to industry. One can even view Apple's exclusive U.S. provision of the iPhone to AT&T as even more variation in the degree of exclusivity across industries. Why is it that some forms of content are available only on one platform, while others are distributed through several or all platforms available—that is, they "multihome"? This paper analyzes industry propensity for exclusivity and presents a model of platform competition. The key driving force is the nature of the relationship between the content and the platforms: outright sale (all control rights, particularly over content pricing, are transferred from the content provider to the platform) or affiliation (the content provider maintains control rights over pricing). Key concepts include: The key is control rights over factors such as content pricing and cash flow. Strategic interactions around control rights between platforms and the content provider can push the industry structure in either direction. High-quality content will multihome, because foreclosing a portion of the market by being exclusive will be too costly. Mid-quality content will be exclusive and can soften price competition at the platform level enough to offset the losses from excluding a portion of the market. Low-quality content will multihome, since it would not yield any comparative advantage if it were exclusive. A platform that has exclusive rights to content may prefer to relinquish control over pricing and associated revenues to the content provider in order to relax price competition with a rival platform. Closed for comment; 0 Comments.
- 16 Jul 2007
- Research & Ideas
Understanding the ‘Want’ vs. ’Should’ Decision
Pizza or salad? Consumers use different approaches to buying things they want (pizza) versus items they should buy (salad). In their research on online grocery-buying habits and DVD rentals, Harvard Business School's Katy Milkman and Todd Rogers, along with Professor Max Bazerman, provide insights on the want-should conflict and the implications for managers in areas such as demand forecasting, consumer spending habits, and effective store layout. Key concepts include: People often behave as if they possess multiple selves with different, competing interests—the "want-self" versus the "should-self." The want-self demands instant gratification while the should-self looks to longer-term interest. Online grocery shoppers order healthier groceries when ordering for delivery in the distant future (i.e., 5 days from now) than when ordering for delivery tomorrow. Grocery stores that locate the produce section ("should" buy) near the entrance have this figured out. Online and catalogue retailers should anticipate that the further in advance of delivery an order is placed, the less a customer is likely to spend. Closed for comment; 0 Comments.
- 28 Jun 2007
- Working Paper Summaries
Film Rentals and Procrastination: A Study of Intertemporal Reversals in Preferences and Intrapersonal Conflict
Throughout our lives, we face many choices between activities we know we should do and those we want to do. Examples of such choices include whether or not to visit the gym, to smoke, to order a greasy pizza or a healthy salad for lunch, and to watch an action-packed blockbuster or a history documentary on Saturday night. Using data on consumption decisions over time from an Australian online DVD rental company, this paper investigates how and why individuals make systematically different decisions when their choices will take effect in the present versus the future. Key concepts include: The more "should watch" characteristics and the fewer "want to watch" characteristics a DVD has, the longer an individual will postpone watching that DVD. Companies that loan goods to consumers and are interested in predicting return times may be better able to forecast borrowing times based on the extent to which the items are "should" or "want" goods. Consumers may be better able to take steps that curb impulsive behavior. Closed for comment; 0 Comments.
- 18 May 2007
- Working Paper Summaries
Media Markets and Localism: Does Local News en Español Boost Hispanic Voter Turnout?
The increased integration of markets for news and entertainment means that more viewers can watch shows that better match their preferences, whether that means American football, Japanese anime, or Mexican soap operas. But is there an attendant risk to civic society, as some scholars claim? Do locally engaged citizens turn into passive viewers? The explosion in the U.S. of local television news in Spanish provides an ideal stage for probing these questions. This paper tests whether the presence of local television news affects local civic engagement in the form of voter turnout. Key concepts include: The availability of Spanish-language local television news significantly boosts Hispanic voter turnout. Regulatory policies should protect local media. Closed for comment; 0 Comments.
- 23 Oct 2006
- Research & Ideas
Will the “Long Tail” Work for Hollywood?
The "long-tail phenomenon" is well documented: Amazon.com makes significant profits selling many low-volume books. But can the long tail work for video sales as well? A new working paper by professors Anita Elberse and Felix Oberholzer-Gee suggests that it may not bring the same benefits to Hollywood. Key concepts include: For video sales, the long-tail phenomenon is not as pronounced at it is for books. There is evidence of a shift in sales to the tail for video, but an increasing number of titles do not sell at all. Hollywood strategists have no easy answers for pumping up revenue, given a decline in the number of blockbuster hits. This new research suggests that the long-tail phenomenon might not be a panacea for video sales. The music industry may be more of a long-tail beneficiary than the movie industry. Closed for comment; 0 Comments.
- 02 Aug 2006
- Research & Ideas
Investor Protection: The Czech Experience
When TV Nova launched as the first private television channel in post-communist Czechoslovakia, few anticipated the business drama behind the scenes. HBS professor Mihir Desai explains what managers can learn from one unlucky investor's experience. Key concepts include: Think hard about partner selection, deal structuring, and operational decisions when expropriation is a key risk. Well-constructed joint ventures should embody the notion of "Trust, but verify." Seek partners with experience with foreign companies and a track record of good behavior. Closed for comment; 0 Comments.
- 24 Jul 2006
- Research & Ideas
How Kayak Users Built a New Industry
Customers have produced some of the most important innovations in industries ranging from oil refining to scientific instruments. But how do user innovations take place? How do they get to market? Professor Carliss Baldwin discusses research into the rodeo kayak industry to understand the world of user innovation. Key concepts include: Many product innovations originate with users, and as user communities quickly add more improvements, a "design space" is initiated. User innovators seem to spring up around industries such as recreation, where participants are passionate and design costs are low. Commercial opportunities to build upon existing products may be available for both users and existing companies—but the timing is different for each. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
The Motion Picture Industry: Critical Issues in Practice, Current Research & New Research Directions
This paper reviews research and trends in three key areas of movie making: production, distribution, and exhibition. In the production process, the authors recommend risk management and portfolio management for studios, and explore talent compensation issues. Distribution trends show that box-office performance will increasingly depend on a small number of blockbusters, advertising spending will rise (but will cross different types of media), and the timing of releases (and DVDs) will become a bigger issue. As for exhibiting movies, trends show that more sophisticated exhibitors will emerge, contractual changes between distributor and exhibitors will change, and strategies for tickets prices may be reevaluated. Key concepts include: Business tools such as quantitative and qualitative research and market research should be applied to the decision-making process at earlier stages of development. Technological developments will continue to have unknown effects on every stage of the movie-making value chain (production, distribution, exhibition, consumption). Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
Advertising and Expectations: The Effectiveness of Pre-Release Advertising for Motion Pictures
This research examines how advertising affects market-wide sales expectations for pre-release movies. The authors use data on advertising expenditures and an online stock market simulation, The Hollywood Stock Exchange (HSX), to track more than 280 movies released between 2001 and 2003. Their findings show that advertising affects the updating of market-wide expectations prior to release, and that this effect is stronger the higher the product quality. Key concepts include: Stock market simulations, such as the Hollywood Stock Exchange, can provide data on test markets, and provide clues about the quality of movies and the appeal of initial advertisements. Studios should spend less money on advertising low-quality movies. Closed for comment; 0 Comments.
- 05 Jul 2006
- Working Paper Summaries
The Power of Stars: Do Stars Drive Success in Creative Industries?
The importance of star power is evident in creative industries from music and film to fashion and architecture. Star actors are paid millions of dollars, but is star talent critical to product success? What determines the value of stars? In the context of the movie business, Elberse calculated the returns in a study comparing 1,200 casting announcements on trading behavior in a simulated and real stock market setting. In a separate study, she also looked at the stars' impact on expected revenues. Key concepts include: Star participation positively impacts movie revenue. Do not just bet on an A-list star: Combine the right star with the right cast. These interdependencies complicate talent recruitment and compensation decisions. Star participation may not add to firm studios' valuation. If profitability or shareholder value is a key objective, studio executives could alter their talent compensation schemes. Closed for comment; 0 Comments.
- 17 Apr 2006
- Research & Ideas
Resisting the Seductions of Success
"The basic problem with the flow of success is that life can look very good when it really isn't," writes Harvard Business School's Joseph L. Badaracco Jr. His new book, Questions of Character, uses literature to look closely at issues of leadership. Here's an excerpt. Closed for comment; 0 Comments.
- 06 Mar 2006
- Research & Ideas
Winners and Losers at the Olympics
We know which athletes won and lost in Turin, but what about the companies and individuals looking for business gold? Professor Stephen A. Greyser looks at the results—and the possibilities ahead in China. Closed for comment; 0 Comments.
- 27 Feb 2006
- Research & Ideas
When Rights of First Refusal Are a Bad Deal
Contracts that include a right of first refusal usually benefit the holder of that right. But not always. New research by professor Alvin E. Roth and colleague Brit Grosskopf explains when it's wise to say no. Closed for comment; 0 Comments.
- 20 Feb 2006
- HBS Case
Oprah: A Case Study Comes Alive
Writing a business case on the icon of daytime television and chief executive of a major media empire was challenge enough for HBS professor Nancy Koehn and colleagues. Oprah Winfrey's visit to campus to talk with graduating students made it ample reward. Closed for comment; 0 Comments.
- 30 Jan 2006
- HBS Case
The Case of the Mystery Writer’s Brand
A look behind how professor John Deighton developed a case study of mystery writer James Patterson. From the HBS Alumni Bulletin. Closed for comment; 0 Comments.
- 03 Oct 2005
- Research & Ideas
The Box Office Power of Stars
Just how much do movie stars contribute to box office success? HBS professor Anita Elberse researched the notion of "star power" to better understand how A-list players contribute to Hollywood's bottom line. Closed for comment; 0 Comments.
Long-Tail Economics? Give Me Blockbusters!
Although the Long Tail theory might argue otherwise, HBS marketing professor John Quelch believes in the power of blockbusters to excite consumers, motivate salespeople, and attract top talent. Key concepts include: In a globally integrated market, blockbuster brands that address common consumer needs are more important than ever. Blockbusters help companies excite consumers, motivate salespeople, and attract top talent. What makes a blockbuster? Size, speed, scarcity, sustainability, sizzle. Closed for comment; 0 Comments.