Determining the optimal release time of movies: A study of movie and market characteristics

2023 | Decision Support Systems | Citations: 0

Authors: Sharma, Megha; Basu, Sumanta; Chakraborty, Soumyakanti; Bose, Indranil

Abstract: The over-the-top (OTT) industry has witnessed remarkable growth in recent years ... Expand

Abstract: The over-the-top (OTT) industry has witnessed remarkable growth in recent years with a sharp increase in the number of subscribers, leading to increased competition among OTT platforms to acquire movie rights. Conse­ quently, the gap between the theatrical and OTT releases has been diminishing over the last few years. An early release of a movie on an OTT platform fetches a higher distribution fee for a movie distributor (MD), however, it reduces the MD’s revenue from the theatrical release. Therefore, it becomes critical for the MD to determine the optimal release time and distribution fee combination. In this paper, we analytically solve the MD’s decision problem and provide a detailed analysis of how the optimal release time varies with changes in platform characteristics such as the proportion of ad revenue and the platform’s risk profile, movie characteristics such as success factor and suitability for OTT, and market characteristics such as broadband penetration, piracy rate and customers’ preferences for viewing channels. We compare our results with the actual release times of 243 movies released during 2015–2022. We find that the optimal release time increases with ad revenue proportion, broadband penetration, and piracy rate, whereas the optimal fee reduces non-linearly with release time and depends on OTT’s risk profile. Our findings also indicate that the optimal release time reduces for movies that do not provide any additional utility for theater goers, and as customers’ preference towards OTT increases. Our work provides much-needed guidelines for professionals dealing with movie releases on OTTs. Collapse

Topics: digital service Netflix Disney+ decision support system Hulu

Methods: parametric test mathematical model ANOVA paired t-test artificial neural network

Special Section: The Economics of Sharing and Information Security

2020 | Journal of Management Information Systems | Citations: 0

Authors: Kauffman, Robert J.; Weber, Thomas A.

Abstract: As the moving parts of a given economy, all individual agents are sitting in th ... Expand

Abstract: As the moving parts of a given economy, all individual agents are sitting in the same boat. Their needs and wants, as they may arise and disappear over time, are connected by common resources, infrastructure, and information. The strength of the interconnections can be modulated by third parties, the latter being thought of as less flexible and more reliable pieces of the economy, including intermediaries, market makers, and information aggregators. This Special Section, on the Economics of Sharing and Information Security, features three papers about the economic incentives to "engage" as a consequence of strategic actions taken by these third parties. In this context, the word "engage" stands for the agents' participation-as suppliers or buyers-in an economy where material and immaterial goods, including durable products, time, and security, are shared with others.Until about a decade ago, whenever purchasing a power drill or a car, an agent would have had to decide about whether her somewhat random future needs, for drilling holes or driving a car, would be worth investing in the ownership of the corresponding durable good. She needs to consider all possible alternatives, such as hiring a service to drill holes or a taxi to get around, whenever such need arises. Since then, what has changed? The answer is, unsurprisingly: a lot! With the advent of sharing markets, agents now have a third option, namely renting a durable good from a peer, which amounts to a decreased commitment in ownership, and more generally, more flexibility to consume. This flexibility is associated with a stronger link between needs (as they come up) and the spending that goes with satisfying them. This results in better use of resources, including not only the agents' cash but also the utilization of the goods themselves, with the drill's lifetime usage increasing dramatically, and the car's need for idle storage dropping. The idea of engagement with others through sharing clearly goes beyond the mere exchange of goods. It includes the exchange and use of one's own time as well. A more flexible use of a driver's time in a market with strong interconnections to the needs of others increases her willingness to engage.We must understand that the intrinsic value of sharing markets comes from the added flexibility in both use (for non-owners) and provision (for owners), and that stronger interconnections between the two sides of the markets (i.e., owners and non-owners) create more flexibility. Then we must also ask how the third parties can take actions so as to encourage the two sides to engage with each other. For example, how would a ridesharing intermediary encourage the owners of vehicles to offer their services to their non-car-owning peers? Or, what mechanisms can be employed by a manufacturer, so as to better respond to the existence of a market for sharing the durable goods he sells? This may mean smarter devices, to better enable the flows of information related to the collaborative consumption and longer product lifetimes, to balance the streams of revenue Collapse

Topics: Uber sharing platform ride sharing platform nonlinear pricing IT security threat

Methods: randomized field experiment quasi experiment

How to Market Smart Products: Design and Pricing for Sharing Markets

2020 | Journal of Management Information Systems | Citations: 1

Authors: Weber, Thomas A.

Abstract: This paper introduces joint product design and non-linear pricing in the context ... Expand

Abstract: This paper introduces joint product design and non-linear pricing in the context of sharing markets. Product ecosystems enable user sensing, setting the stage for the control of post-purchase consumption patterns. By varying the degree to which products can be reused and transferred among peers, a company can engineer their shareability, which together with a capacity of aftermarket control, allows for flexible non-linear pricing that involves charging for the initial purchase and for subsequent collaborative transfers separately. Using a dynamic model with heterogeneous consumers and asymmetric information, we analyze a firm’s economic strategy, including ecosystem design and flexible pricing, for long-term profitability. We show that an optimal product design balances durability-driven demand and price effects. Furthermore, for any given product design a profit-maximizing non-linear pricing schedule features retail price and sharing tariff in a robustly quadratic relationship, independent of the specifics of the consumer distribution. Various extensions, relating to the interaction of the firm’s policy with a sharing market and the possibility of time-varying sales distributions, are also considered. Collapse

Topics: price management sharing platform nonlinear pricing authorization computer hardware

Methods: optimization model

Nonlinear Pricing of Shareable Products

2020 | HICSS | Citations: 5

Authors: Weber, Thomas A

Abstract: We consider a durable-goods monopolist who is able to control the collaborative ... Expand

Abstract: We consider a durable-goods monopolist who is able to control the collaborative consumption of its goods on an aftermarket by a sharing tariff. Consumers are heterogeneous with respect to their respective need propensities in each period. We show that the firm may be able to extract this private information by offering a nonlinear pricing scheme, which amounts to a menu of options that distinguish themselves by different combinations of retail price and sharing tariff, whereby the latter is charged to owners at the point of sharing their item with a nonowner on the sharing market. The solution, which is obtained using optimal control theory, critically depends on the product’s durability. Collapse

Topics: sharing platform nonlinear pricing price management smart device privacy

Methods: dynamic programming

Theories: control theory

Nonlinear Pricing of Software with Local Demand Inelasticity

2020 | Information Systems Research | Citations: 0

Authors: Xin, Mingdi; Sundararajan, Arun

Abstract: Nonlinear usage-based pricing is applied extensively in software markets. Differ ... Expand

Abstract: Nonlinear usage-based pricing is applied extensively in software markets. Different from other products, customers of software products usually cannot vary their required usage volume, a property we label local demand inelasticity. For instance, a client firm that needs a sales force automation software either buys one user license for every salesperson in its organization or does not buy at all. It is unlikely to buy licenses for some salespersons but not the others. This demand feature violates a critical assumption of the standard nonlinear pricing literature that consumers are flexible with their usage volume, and their valuation changes smoothly with usage volume. Consequently, standard nonlinear pricing solutions are inapplicable to many software products. This paper studies the optimal nonlinear usage-based pricing of software when customers’ demand is locally inelastic. This unique demand feature necessitates a new approach to solve the nonlinear pricing problem. We provide the solution to a complicated nonlinear pricing problem with discontinuous and inelastic individual demand functions, with virtually no restriction on demand distribution, and no single-crossing restriction on valuation functions. We show that under a weak ordering condition of customer types, this complex pricing problem can be decomposed into a set of much simpler subproblems with known solutions. Our pricing solution is easily implementable and applicable to a broad range of demand systems, including those described by the families of exponential and normal distributions. Moreover, local demand inelasticity has a critical impact on key efficiency results. Although in standard nonlinear pricing models, the optimal pricing schedule typically involves distortion (deviation from the first best) at all but one point, this is no longer the case with local demand inelasticity. We characterize the conditions under which the optimal nonlinear pricing strategy involves quantity discounts and compare nonlinear usage-based pricing with flat-fee (for unlimited usage) pricing strategies. Collapse

Topics: price management nonlinear pricing sales information system technology adoption

Methods: computational algorithm optimization model hazard function literature study

On the Optimal Fixed-Up-To Pricing for Information Services

2019 | Journal of the Association for Information Systems | Citations: 0

Authors: Wu, Shinyi; Pavlou, Paul

Abstract: Fixed-up-to (FUT) pricing allows consumers to purchase a fixed usage amount of ... Expand

Abstract: Fixed-up-to (FUT) pricing allows consumers to purchase a fixed usage amount of an information service for a certain fixed price chosen from a set of options. In this study, we derive an optimal analytical solution for FUT pricing without imposing the strong single-crossing assumption. Further, we illustrate the analytical solution by leveraging mixed integer nonlinear programming to derive an optimal FUT pricing scheme for information services and also investigate when and by how much FUT pricing improves upon commonly used "flat rate" pricing. Our numerical results show that FUT pricing improves the service provider's profits while enhancing social welfare when consumers face different maximum consumption-level bounds. Notably, in terms of optimal pricing, our numerical results show that the consumers' maximum consumption-level bounds are more important than their utility functions. Most importantly, our results show that FUT pricing performs better than flat rate pricing under conditions of incomplete information. Finally, we empirically show that it is not necessary to treat over-the-limit rates as a decision variable in terms of optimal FUT pricing since both FUT pricing and three-part tariffs are reasonable approximations of nonlinear pricing in terms of both firm profits and social welfare. We conclude with a discussion of theoretical and practical implications for the design of optimal FUT pricing in terms of enhancing firm profits, consumer surplus, and social welfare. Collapse

Topics: price management IS economics economic surplus consumer surplus nonlinear pricing

Methods: non linear optimization optimization model archival research experiment case study

Sponsored Data Services and Consumer Welfare on Mobile Broadband

2017 | International Conference on Information Systems | Citations: 0

Authors: Qiu, Liangfei; Wang, Chong (Alex); Jia, Jia

Abstract: Sponsored data services provide an alternative data consumption option for users ... Expand

Abstract: Sponsored data services provide an alternative data consumption option for users of mobile broadband services. Data sponsoring programs allow content providers (CPs), rather than consumers, to pay for data traffic incurred when consuming the sponsoring CP’s digital content. Internet service providers (ISPs) have been experimenting with this option for effective monetization of mobile broadband traffic. Meanwhile, policy makers are concerned about its market implications. In this study, we examine the impact of sponsored data services on an ISP’s pricing decisions and consumer welfare in a stylized game-theoretical model. We allow consumer heterogeneity in both usage pattern and taste for content services. Our model analysis reveals that a profitmaximizing ISP will always, irrespective of the market condition, prefer the arrangement that allows both CPs to sponsor data traffic. However, we find that the ISP’s decision to induce sponsoring competition on the CPs’ side will not help to increase consumer welfare. Collapse

Topics: price management IS economics consumer surplus nonlinear pricing net neutrality

Theories: game theory

Pricing Data Services: Pricing by Minutes, by Gigs, or by Megabytes per Second?

2016 | Information Systems Research | Citations: 5

Authors: Chen, Ying-Ju; Huang, Ke-Wei

Abstract: Motivated by the pervasive discrepancy among the pricing schemes of data service ... Expand

Abstract: Motivated by the pervasive discrepancy among the pricing schemes of data services, this paper investigates the selection of pricing metrics (variables) and the corresponding pricing plans. We construct a stylized model in which a monopoly data services seller faces heterogeneous consumers whose utilities depend on the usage and the connection speed. We examine three options for the seller to conduct the second-degree (indirect) price discrimination: by minutes, by gigabytes (Gigs), and by megabytes per second (Mbps). We show that the after-sales self-selection behaviors have a significant impact on the seller’s profitability, and it leads to a first-order influence on the pricing metric selection. We prove that either pricing by Gigs or Mbps can be optimal. Pricing by Gigs can dominate pricing by Mbps even if the consumer’s utility is more sensitive in changes in the connection speed. We also find that when incorporating the bandwidth costs or congestion costs, pricing by Mbps becomes more attractive as it allows the seller to directly control the congestion effect. These findings may help practitioners to develop their own pricing plans and pricing metrics selection. Collapse

Topics: price management price discrimination nonlinear pricing consumer behavior IS economics

Methods: optimization model

Theories: lemon market theory

Pricing and Upgrade Strategies for Software Vendors in the Software-as-a-Service Market

2015 | International Conference on Information Systems | Citations: 0

Authors: Liu, Charles; Au, Yoris; Ayaburi, Emmanuel

Abstract: This study examines the competition between an independent software vendor (ISV) ... Expand

Abstract: This study examines the competition between an independent software vendor (ISV) who offers a standard fixed-price software product and a cloud software vendor (CSV) who adopts a usage-based linear pricing scheme for its cloud-based software. Using a game theoretic approach, we set up a duopoly model to derive the optimal pricing and product feature choice decisions for both the ISV and the CSV in a market characterized with heterogeneous consumer preferences for software features, and different risk structures. Next, we plan to extend the duopoly model into a two-stage game and examine how the equilibrium outcomes change when we allow both vendors to exercise their software upgrade strategies. The results of our study will provide important implications to vendors and consumers in software markets where the Software-as-aService (SaaS) business model began to prevail and contribute to the growing literature on economics of cloud computing. Collapse

Topics: cloud computing price management duopoly software as a service IS economics

Theories: game theory

Pricing of Wireless Services: Service Pricing vs. Traffic Pricing

2013 | Information Systems Research | Citations: 3

Authors: Lahiri, Atanu; Dewan, Rajiv M.; Freimer, Marshall

Abstract: As the ability to measure technology resource usage gets easier with increased c ... Expand

Abstract: As the ability to measure technology resource usage gets easier with increased connectivity, the question whether a technology resource should be priced by the amount of the resource used or by the particular use of the resource has become increasingly important. We examine this issue in the context of pricing of wireless services: should the price be based on the service, e.g., voice, multimedia messages, short messages, or should it be based on the traffic generated? Many consumer advocates oppose discriminatory pricing across services believing that it enriches carriers at the expense of consumers. The opposition to discrimination has grown significantly, and it has even prompted the U.S. Congress to question executives of some of the biggest carriers. With this ongoing debate on discrimination in mind, we compare two pricing regimes here. One regime, namely, service pricing, involves pricing different services differently. The other one, namely, traffic pricing, involves pricing the traffic (i.e., bytes) transmitted. We show why the common wisdom, that discriminatory pricing across services increases profits and harms consumers, may not always hold. We also show that such discrimination can increase social welfare. Collapse

Topics: price management IS economics consumer surplus economic surplus price discrimination

Methods: literature study