Thus, we capitalize on data that include real sales in multiple channels with variation in exclusive releases in digital channels and variation in the theater-to-home-video window length. Our data encompasses the strategy of providing exclusive digital offers shortly before other home video releases. These data are unique because the movie distributor cooperating with us, who provided the field data, experimented with exclusive offers for the home video channels instead of the traditional simultaneous release in digital and physical home video channels (day-and-date strategy). We apply our framework to a unique sample of 260 movies distributed throughout different home video channels after their theatrical premiere. We also consider shadow diffusion (Muller et al., 2009), latent consumer buzz, and herd behavior to motivate positive cross-channel demand spillovers or cross-channel cannibalization. We build on heterogeneous intertemporal preferences with perishable demand and cover the concept of perceived supply-side scarcity to explain a potential direct increase in demand in the exclusive channel. We focus on how exclusive digital offers directly affect demand in the exclusive channel and on how exclusive digital offers induce cross-channel demand spillover effects onto the non-exclusive channels. Building on this framework, we examine a multichannel distribution system with different physical and digital channels and consumers’ heterogeneous preferences in their distribution channel choices. ( 2007) by adding the concept of providing exclusive offers. Conceptually, we extend the sequential distribution framework from Hennig-Thurau et al. In terms of scope, we examine the effect of exclusive digital offers on demand in physical and digital distribution channels and analyze whether exclusivity of digital channels increases or decreases sales across all transactional home video channels (physical purchase, digital purchase, and digital rental Footnote 1). We address this research gap with an empirical study on the exclusivity of digital channels for movies. They also have the option of providing at least one version exclusively for a given period (e.g., 14 days) before the release in other home video channels (e.g., DVD, Blu-ray). Due to the introduction of digital rights management systems, content providers can execute new sequential schedules by means of offering movie downloads from platforms, such as iTunes and, with either unlimited (digital purchase) or 48-h access within a 30-day period (digital rental). In the motion picture industry, sequential release schedules with exclusive release windows were traditionally implemented into an exclusive theatrical exhibition window before the start of DVD distribution, which we denote as the theater-to-home video window (Ahmed & Sinha, 2016 Lehmann & Weinberg, 2000). Exclusive release windows refer to exclusive distribution periods for a limited time in one of the distribution channels, while non-exclusive release windows are distribution periods with multiple consumption options. The economic rationale is to target distinct consumer segments with a specific version to skim different levels of willingness to pay (Ahmed & Sinha, 2016). Sequential distribution describes a distribution strategy that uses sequential releases of a product in multiple digital and physical distribution channels to establish exclusive and non-exclusive release windows. Our findings are also relevant to industries that use different online and offline release windows (book publishers) or give exclusive access across different platforms (game publishers). Exclusive home video offers outperform mere reductions in the theatrical exclusivity period thus, implementing exclusive digital home video releases is a promising alternative to avoid conflict-prone reductions of the overall theater-to-home-video release window. Rather than sales cannibalizations, we find positive cross-channel demand spillovers from exclusive digital offers to delayed physical purchases. Overall, the results indicate substantial profits from exclusive offers. We fit a system of equations to a unique sample of 260 movies distributed in theaters, digital purchases, digital rentals, and physical purchases channels. We empirically examine the impact of exclusive digital movie offers on demand in digital and physical distribution channels. Extant literature on sequential distribution for movies largely concentrates on the theater-to-home-video window length (e.g., DVD), thus, neglecting digital distribution channels, particularly the potential of exclusive digital offers when multiple subsequent home video channels are available. Digital technologies allow versioning a product (e.g., a movie) for different physical and digital sequential distribution channels to target heterogeneous consumer segments, thereby creating exclusive offers.
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