IDEAS home Printed from https://ideas.repec.org/a/inm/ormksc/v40y2021i5p821-843.html
   My bibliography  Save this article

Digitization and Flexibility: Evidence from the South Korean Movie Market

Author

Listed:
  • Joonhyuk Yang

    (Stanford Graduate School of Business, Stanford University, Stanford, California 94305; Mendoza College of Business, University of Notre Dame, Notre Dame, Indiana 46556)

  • Eric T. Anderson

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208)

  • Brett R. Gordon

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208)

Abstract

We examine how the introduction of digital cinema technologies in the South Korean movie industry created flexibility for theaters in movie showings. Using detailed data on theaters’ digital adoption and daily assortment decisions between 2006 and 2016, we show that, on average, digitization is associated with both increased variety of movies and increased showings of the most popular movies. But, delivering these benefits to consumers took at least four years to materialize and varied with the number of screens in a theater. During the early years of theater digitization, product variety declined in larger theaters. Yet, when digital movies became widely available, product variety increased. Once digital movies were broadly available, we show that theaters created increased product variety during less popular time slots and offered more showings of consumers’ favorite movies during peak demand on weekend evenings. Overall, we show that digitization of movies and projection technology creates flexibility in scheduling, which seems to allow theaters to better respond to consumer demand.

Suggested Citation

  • Joonhyuk Yang & Eric T. Anderson & Brett R. Gordon, 2021. "Digitization and Flexibility: Evidence from the South Korean Movie Market," Marketing Science, INFORMS, vol. 40(5), pages 821-843, September.
    • Handle: RePEc:inm:ormksc:v:40:y:2021:i:5:p:821-843
    DOI: 10.1287/mksc.2020.1282
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mksc.2020.1282
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mksc.2020.1282?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Daniel F. Spulber, 1996. "Market Microstructure and Intermediation," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 135-152, Summer.
    2. Weinstein, Mark, 1998. "Profit-Sharing Contracts in Hollywood: Evolution and Analysis," The Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 67-112, January.
    3. Heski Bar-Isaac & Guillermo Caruana & Vicente Cunat, 2012. "Search, Design, and Market Structure," American Economic Review, American Economic Association, vol. 102(2), pages 1140-1160, April.
    4. Daniel Fleder & Kartik Hosanagar, 2009. "Blockbuster Culture's Next Rise or Fall: The Impact of Recommender Systems on Sales Diversity," Management Science, INFORMS, vol. 55(5), pages 697-712, May.
    5. Erik Brynjolfsson & Yu (Jeffrey) Hu & Duncan Simester, 2011. "Goodbye Pareto Principle, Hello Long Tail: The Effect of Search Costs on the Concentration of Product Sales," Management Science, INFORMS, vol. 57(8), pages 1373-1386, August.
    6. Andrew Goodman-Bacon, 2018. "Difference-in-Differences with Variation in Treatment Timing," NBER Working Papers 25018, National Bureau of Economic Research, Inc.
    7. Luis Aguiar & Joel Waldfogel, 2018. "Quality Predictability and the Welfare Benefits from New Products: Evidence from the Digitization of Recorded Music," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 492-524.
    8. Peter Hull, 2018. "Estimating Treatment Effects in Mover Designs," Papers 1804.06721, arXiv.org.
    9. Erik Brynjolfsson & Michael D. Smith, 2000. "Frictionless Commerce? A Comparison of Internet and Conventional Retailers," Management Science, INFORMS, vol. 46(4), pages 563-585, April.
    10. Jeffrey R. Brown & Austan Goolsbee, 2002. "Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 481-507, June.
    11. Waldfogel, Joel & Reimers, Imke, 2015. "Storming the gatekeepers: Digital disintermediation in the market for books," Information Economics and Policy, Elsevier, vol. 31(C), pages 47-58.
    12. Peter E. Rossi, 2014. "Invited Paper —Even the Rich Can Make Themselves Poor: A Critical Examination of IV Methods in Marketing Applications," Marketing Science, INFORMS, vol. 33(5), pages 655-672, September.
    13. Athey, Susan & Imbens, Guido W., 2022. "Design-based analysis in Difference-In-Differences settings with staggered adoption," Journal of Econometrics, Elsevier, vol. 226(1), pages 62-79.
    14. Darren Filson & David Switzer & Portia Besocke, 2005. "At the Movies: The Economics of Exhibition Contracts," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 354-369, April.
    15. Silver, Jon & Alpert, Frank, 2003. "Digital dawn: a revolution in movie distribution?," Business Horizons, Elsevier, vol. 46(5), pages 57-66.
    16. F. Andrew, 2002. "Revenue-Sharing in Movie Exhibition and the Arrival of Sound," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 380-402, July.
    17. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    18. Joel Waldfogel, 2016. "Cinematic Explosion: New Products, Unpredictabilty and Realized Quality in the Digital Era," Journal of Industrial Economics, Wiley Blackwell, vol. 64(4), pages 755-772, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cameron D. Miller & Richard D. Wang, 2024. "Product digitization and differentiation strategy change: Evidence from the book publishing industry," Strategic Management Journal, Wiley Blackwell, vol. 45(7), pages 1241-1272, July.
    2. Mary J. Benner & Joel Waldfogel, 2023. "Changing the channel: Digitization and the rise of “middle tail” strategies," Strategic Management Journal, Wiley Blackwell, vol. 44(1), pages 264-287, January.
    3. Huber, Martin, 2019. "An introduction to flexible methods for policy evaluation," FSES Working Papers 504, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    4. Alexander Cuntz, 2018. "Creators' Income Situation in the Digital Age," WIPO Economic Research Working Papers 49, World Intellectual Property Organization - Economics and Statistics Division.
    5. Hoskins, Jake D., 2020. "The evolving role of hit and niche products in brick-and-mortar retail category assortment planning: A large-scale empirical investigation of U.S. consumer packaged goods," Journal of Retailing and Consumer Services, Elsevier, vol. 57(C).
    6. Moraga-González, José L. & Sándor, Zsolt & Wildenbeest, Matthijs R., 2014. "Prices, Product Differentiation, And Heterogeneous Search Costs," IESE Research Papers D/1097, IESE Business School.
    7. Joel Waldfogel, 2017. "How Digitization Has Created a Golden Age of Music, Movies, Books, and Television," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 195-214, Summer.
    8. Thomas W. Quan & Kevin R. Williams, 2016. "Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail," Cowles Foundation Discussion Papers 2054, Cowles Foundation for Research in Economics, Yale University.
    9. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    10. Alejandro Zentner & Michael Smith & Cuneyd Kaya, 2013. "How Video Rental Patterns Change as Consumers Move Online," Management Science, INFORMS, vol. 59(11), pages 2622-2634, November.
    11. Jianfei Cao & Shirley Lu, 2019. "Synthetic Control Inference for Staggered Adoption: Estimating the Dynamic Effects of Board Gender Diversity Policies," Papers 1912.06320, arXiv.org.
    12. Dokyun Lee & Kartik Hosanagar, 2019. "How Do Recommender Systems Affect Sales Diversity? A Cross-Category Investigation via Randomized Field Experiment," Service Science, INFORMS, vol. 30(1), pages 239-259, March.
    13. Marios Kokkodis & Panagiotis G. Ipeirotis, 2021. "Demand-Aware Career Path Recommendations: A Reinforcement Learning Approach," Management Science, INFORMS, vol. 67(7), pages 4362-4383, July.
    14. Javier Donna & Andre Trindade & Pedro Pereira & Tiago Pires, 2018. "Measuring the Welfare of Intermediation in Vertical Markets," 2018 Meeting Papers 984, Society for Economic Dynamics.
    15. Pozzi, Andrea, 2013. "E-commerce as a stockpiling technology: Implications for consumer savings," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 677-689.
    16. Luis Aguiar Wicht, 2019. "Going Mobile: The Effects of Smartphone Usage on Internet Consumption," JRC Working Papers on Digital Economy 2019-07, Joint Research Centre.
    17. Christian Peukert & Imke Reimers, 2022. "Digitization, Prediction, and Market Efficiency: Evidence from Book Publishing Deals," Management Science, INFORMS, vol. 68(9), pages 6907-6924, September.
    18. Richards, Timothy J. & Hamilton, Stephen F. & Allender, William, 2016. "Search and price dispersion in online grocery markets," International Journal of Industrial Organization, Elsevier, vol. 47(C), pages 255-281.
    19. Thomas W. Quan & Kevin R. Williams, 2017. "Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail," Cowles Foundation Discussion Papers 2054R3, Cowles Foundation for Research in Economics, Yale University, revised Jun 2018.
    20. Yinbo Feng & Ming Hu, 2017. "Blockbuster or Niche? Competitive Strategy under Network Effects," Working Papers 17-13, NET Institute.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormksc:v:40:y:2021:i:5:p:821-843. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.