Coordination for distribution of motion pictures in the context of piracy

Yeu-Shiang Huang, Wei Jeh Huang, Chih Chiang Fang

Research output: Contribution to journalArticle

Abstract

In addition to the traditional DVD rental channel, with the pervasive use of Internet, consumers can also watch motion pictures by purchasing videos on demand (VOD) from an on-line digital channel. However, both traditional and online channels suffer from piracy, which may decrease the overall real demand for such products. This study proposes a revenue-sharing mechanism in which the relationships among the film distributor, traditional DVD rental store, and Internet VOD service provider are investigated to avoid channel conflicts and achieve effective supply chain coordination. We assume that the services provided by the two channels are substitutable for consumers, and consider that both the diffusion effect and piracy rate are essential in order to forecast the demand for motion pictures. A game theoretic model is constructed to obtain the optimal revenue sharing ratio and the equilibrium retail prices for the two channels, with the aim of enhancing overall supply chain performance and profitability. The results show that when piracy is considered in the market, the market potentials of the two channels would decrease, and the price elasticity would increase, so the members of the supply chain in the film industry have to pay more attention to the impacts of cross elasticity, and be more prudent when determining their pricing strategies.

Original languageEnglish
Pages (from-to)209-225
Number of pages17
JournalJournal of Business Research
Volume85
DOIs
Publication statusPublished - 2018 Apr 1

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Piracy
Motion pictures
Revenue sharing
World Wide Web
Distributor
Supply chain performance
Supply chain coordination
Film industry
Retail prices
Profitability
Elasticity
Purchasing
Channel conflict
Supply chain
Service provider
Pricing strategy
Online channel
Game-theoretic models
Price elasticity
Market potential

All Science Journal Classification (ASJC) codes

  • Marketing

Cite this

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Coordination for distribution of motion pictures in the context of piracy. / Huang, Yeu-Shiang; Huang, Wei Jeh; Fang, Chih Chiang.

In: Journal of Business Research, Vol. 85, 01.04.2018, p. 209-225.

Research output: Contribution to journalArticle

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