Competitive strategies in the motion picture industry: An ABM to study investment decisions

Authored by Sebastiano A Delre, Claudio Panico, Berend Wierenga

Date Published: 2017

DOI: 10.1016/j.ijresmar.2016.05.005

Sponsors: No sponsors listed

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Model Documentation: Other Narrative Flow charts Pseudocode Mathematical description

Model Code URLs: Model code not found

Abstract

We study a parsimonious competition setting whereby two studio producers launch their movies simultaneously. They compete deciding about the positioning of their movies, as they can position close to or far from the mainstream, and investing in advertising and in quality. We study our competitive setting with an analytical model and solve it using a standard game-theoretical technique. Next, we use an agent-based model (ABM) to relax several assumptions of the analytical model and investigate more realistic market situations, such as symmetric as well as asymmetric positioning, competitions among big and/or small studios, settings with more than two competitors, and studios that use weighted and evolving decision rules. Our results explain interesting dynamics behind the scenes of the competition. They indicate the drivers of studios' behaviors and shed light on some important aspects of their strategic competition. In this sense, our results offer relevant theoretical and practical implications. (C) 2016 Elsevier B.V. All rights reserved.

Tags

Competition Dynamics Word-of-mouth advertising Model Product Impact Box-office performance Experience goods Agent-based-modeling Market share International markets Distribution channels Price-competition