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Digitization and Flexibility: Evidence from the South Korean Movie Market

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  • 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
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    References listed on IDEAS

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