Movie studios split ticket revenues with the owners of the movie theaters that show their films. When

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Movie studios split ticket revenues with the owners of the movie theaters that show their films. When a movie is no longer being shown in theaters, theater owners earn nothing further from the film, but studios continue to earn revenue when the movie is available for home viewing on DVD, Blu-ray, streaming, and cable. Theater owners would prefer that the time between when a movie appears in theaters and when it becomes available for home viewing be as long as possible. Typically, movies are not available for home viewing for at least 90 days after they are first shown in theaters. An article in the Wall Street Journal in 2017 noted a possible change to this system: “Hollywood studios are preparing to upend decades of tradition by releasing movies at home less than 45 days after they debut on the big screen.” The article went on to note, “Studio executives say they would prefer to reach a deal with theaters, one reason they have been reluctant to unilaterally announce a new policy.” Typically, would you expect that the profits of movie studios are more at risk from the bargaining power of theaters, or would you expect that the profits of theaters are more at risk from the bargaining power of movie studios? Have streaming and other online ways of watching movies changed the relative bargaining power of movie studios and theater owners? Briefly explain.

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Economics

ISBN: 978-0134738321

7th edition

Authors: R. Glenn Hubbard, Anthony Patrick O Brien

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