BACKGROUND

1
BACKGROUND

• What happens when a new medium challenges an
  existing one?
• Several previous examples
• radio and print
• public changes -- actually a cohort effect
• television and film
• at first - film profits were hurt
• later - film developed its own niche

2
VIDEOS VERSUSMOVIE THEATERS
BACKGRO VIDEOS VERSUSMOVIE THEATERS UND

• Will availability of feature films on video
  affect theater attendance?
• Windowing
• (Owen Wildman, 1992 Litman, 1999)
• A form of price discrimination
• films are released to theaters before video
• for a consumer, waiting offers a cost savings
• Here Examination of CONSUMERS

3
HYPOTHESES
HYPOTHESES

• Rational economic price discrimination model
• Who will attend movies?
• H1 Younger people
• H2 Higher incomes
• H3 Smaller households
• H4 People with more interest in newer products
• Who will watch videos?
• H1 Older people
• H2 Lower incomes
• H3 Larger households
• H4 People with less interest in newer products

4
METHODS

• DDBs 1996 Lifestyles data
• initial mailings of 5,000
• 4,041 total respondents (70 response rate)
• 3,130 supplemental survey (77 response rate)
• This research
• age, income, household size
• desire for the latest products
• movie and video consumption questions

5
OF FILMS AND VIDEOS SEEN LAST YEAR

• last year Attended film Rented video Bought
  video
• None 965 (31.1) 1264 (41.4) 931 (30.2)
• 1-4 times 1051 (33.6) 527 (17.1) 932
  (30.5)
• 5-8 times 510 (16.3) 455 (14.7) 442
  (14.5)
• 9-11 times 265 (8.5) 367 (11.9) 226
  (7.4)
• 12-24 times 215 (6.9) 414 (13.4) 123
  (4.0)
• 25-51 times 68 (2.2) 248 (8.0) 45
  (1.5)
• 52 or more 29 (0.9) 143 (4.6) 23
  (0.8)
• MEAN 2.37 3.04 2.10

6
RESULTS OF FILMS
RESULTSNUMBER of FILMS

• H1 Younger people
• Beta -.191, p
• H2 Higher incomes
• Beta .201, p
• H3 Smaller households
• Beta -.137, p
• H4 People w/more interest in newer products
• Beta .138, p

7
RESULTSRATIO of VIDEOS/FILMS

• H1 Older people
• Beta .153, p
• H2 Lower incomes
• Beta -.082, p
• H3 Larger households
• Beta .189, p
• H4 People w/less interest in newer products
• Beta -.192, p .001- SUPPORTED

8
CONCLUSIONS

• Compatible with rational economic model
• MOVIES PREFERED BY
• People who value latest films
• Younger people
• People with higher incomes
• People with smaller families
• The desire to be the first product predicts
  economic value and price discrimination