How do theatrical box office revenues affect DVD retail sales? Australian empirical evidence |
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Authors: | Jordi McKenzie |
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Institution: | (1) Discipline of Economics, University of Sydney, Sydney, NSW, 2006, Australia |
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Abstract: | This study considers the Australian DVD industry using a data set of retail sales for over 44,800 titles 1997–2007. A sub-sample
of 760 titles which also received an initial theatrical release reveals that the DVD revenue distribution has thicker tails
than the theatrical revenue distribution implying the top-ranked DVDs earning a greater share of revenues than their theatrical
contemporaries. A comparison of revenues finds not only a high degree of correlation between the two markets, but a relationship
that is nonlinear and increasing at higher theatrical revenue levels. This finding is consistent with a word-of-mouth momentum
effect and more institutional flexibility in the DVD market. The high levels of correlation are present across all genres/ratings
and are observed to be stronger for large release titles. Finally, a seemingly unrelated regression structure is proposed
to jointly consider the two markets, which is shown to be empirically valid. |
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Keywords: | |
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