Smith and Telang (2016)
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Source Details
| Smith and Telang (2016) | |
| Title: | Windows of Opportunity: The Impact of Piracy and Delayed International Availability on DVD Sales |
| Author(s): | Smith, M. D., Telang, R. |
| Year: | 2016 |
| Citation: | Smith, M., & Telang, R. (2016). Windows of Opportunity: The Impact of Piracy and Delayed International Availability on DVD Sales. IO: Empirical Studies of Firms & Markets eJournal. |
| Link(s): | Open Access |
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| About the Data | |
| Data Description: | The data in this study comprises: 220 movies from January 2009 to April 2011; seven different geographical markets; revenue both for DVD and theatrical release; the date in which the movie was released in cinemas and on DVD in a specific country; the date in which the movie was released in cinemas and DVD globally; box office revenues and DVD sales; information on when the first pirated version becomes available. |
| Data Type: | Primary data |
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| Cross Country Study?: | Yes |
| Comparative Study?: | No |
| Literature review?: | No |
| Government or policy study?: | No |
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Abstract
“For many years movies have been released using a series of staggered release windows, where releases are strategically timed across different product and geographical markets. These release windows have meant that movies were released first in theaters and several months later on DVD, and in most cases were released first in the United States and later in international markets. These established release windows have come under increasing pressure from digital piracy. In responses, studios have changed their strategies to reduce these delays. Nonetheless, delayed releases persist for a variety of operational, financial, and regulatory reasons, which means that pirated digital DVD rips can be available for several weeks, and in some cases months, before the DVD is legally available in international markets. Our research seeks to measure the impact of this early piracy availability on DVD sales in legitimate channels. Our methodology uses observed box office revenue in the theatrical window to break the endogeneity between release window timing and DVD sales. Using data from 2009-2011, our results suggest that an additional 10-day delay between the availability of digital piracy and the legitimate DVD release date in a particular country is correlated with a 2-3% reduction in DVD sales in that country. This result is robust across a variety of different specifications and, as expected, is higher for high piracy countries than for lower piracy countries. Our results show how digital networks have increased the interconnection between geographically dispersed markets, and suggest a continued need for studios, their market partners, and government agencies to revisit established marketing and regulatory practices given the widespread availability of pirated content”.
Main Results of the Study
The intensification of global data networks has an impact on windowing strategies for movie releases. In a world where consumers can obtain a pirated digital copy, the delay of the official digital content – the DVD - is difficult to implement. Indeed, pirated digital copies of certain content are available on average 2 weeks before the release of the official DVD in the first country. In this study, in particular, it has been shown that each additional delay of 10 days for a DVD to be officially released in a certain country, after the same DVD is globally available in its pirated form, leads to a 2-3% decline in DVD sales in that country. Therefore, not only piracy has of course a negative impact on official DVD sales, but also this shows a global interconnection of different national markets, and it would be advisable for distribution partners and local regulators to avoid (significant) delays of international movie releases.
Policy Implications as Stated By Author
Although this aspect cannot probably be considered a proper policy implication, the authors suggest a revision of certain established marketing and regulatory practices (by involving also the perspective of government agencies) in order to face the spread of global piracy.
Coverage of Study
Datasets
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