Streaming platforms vs. theaters: Navigating the strategic choices of film distributors in channel selection

The increasing prevalence of streaming platforms is transforming the film distribution landscape, compelling distributors to reassess their channel strategies and consumers to modify their viewing habits. This transformation has garnered considerable attention in both the film industry and academia, especially concerning the determination of optimal release channels for films. Therefore, this study explores the strategic considerations of film distributors through the development of a game-theoretic model that integrates the effects of market expansion, channel differentiation, and diminishing consumer utility on decision-making processes. This paper examines the profitability and social welfare of the film distributor, streaming platform, and theater under different strategies. Through a comprehensive analysis, this study aims to reveal the critical factors that influence the profits and social welfare of all parties under different strategies Our findings suggest that under specific conditions, prioritizing the theatrical release of films or releasing them exclusively on streaming platforms can lead to higher profitability for distributors. Additionally, we investigate the effects of delayed release times and channel differences on the equilibrium strategies of streaming platforms and theaters. Our analysis demonstrates that the hassle cost coefficient significantly influences the profitability of both streaming platforms and theaters across different strategies. Ultimately, we observe that prices and demand in both streaming and theatrical channels are affected by consumer utility loss due to delayed purchases. This study establishes a comprehensive theoretical framework to guide strategic decision-making for film distributors, streaming platforms, and theaters. Additionally, it offers valuable insights into the development of the film industry, serving as an essential reference for further research and strategic planning.