05 Jul 2006Working Paper Summaries

The Motion Picture Industry: Critical Issues in Practice, Current Research & New Research Directions

by Jehoshua Eliashberg, Anita Elberse and Mark A. A. M. Leenders

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).

Author Abstract

The motion picture industry provides a fruitful research domain for scholars in marketing and other disciplines, The industry has a high economic importance and is appealing to researchers because it offers both rich data that cover the entire product lifecycle for a large number of new products and because it provides many unsolved 'puzzles.' Despite the fact that the amount of scholarly research in this area is rapidly growing, its impact on practice has not been as significant as in other industries (e.g., consumer packaged goods). In this article, we discuss critical practical issues for the motion picture industry, review existing knowledge on those issues, and outline promising research directions. Our review is organized around the three key stages in the value chain for theatrical motion pictures: production, distribution, and exhibition. We discuss various conjectures, framed as research challenges or specific research hypotheses, related to each stage in the value chain, followed by a set of specific research avenues for each of those stages. We focus on what we believe are critical managerial issues. Keywords: Motion Picture Industry, Entertainment Industry, Review, Research and Models