Review of Marketing Science
Volume   Article 
Product Entry Timing in Dual Distribution
Channels: The Case of the Movie Industry
Ashutosh Prasad∗ Bart Bronnenberg†
Vijay Mahajan‡
∗The University of Texas at Dallas, aprasad@utdallas.edu
†The University of California, Los Angeles, bart.bronnenberg@anderson.ucla.edu
‡UT Austin, vijay.mahajan@mccombs.utexas.edu
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Product Entry Timing in Dual Distribution
Channels: The Case of the Movie Industry∗
Ashutosh Prasad, Bart Bronnenberg, and Vijay Mahajan
Abstract
In many durable goods industries, firms continuously offer new products to customers
and market them in different versions through different channel of distribution. This
paper examines the issue of when to introduce the product into the different channels.
The determinants of entry time include the discounting of future profits, the foresight of
the firm, customers’ expectations, and the possibility of cannibalization. Of special interest
is the effect of customers’ expectations about the timing of sequential entries. Specifically,
it is shown here that profits decline if firms ignore the role of customer expectations. We
discuss how our results can be used to get insights into the workings of the US motion
picture industry, which is characterized by sequential introduction of movies first into
theaters followed by home video. Finally, a closed form solution for an optimal sequential
timing policy is provided.
KEYWORDS: New Product Introductions, Durable Goods, Motion Picture Industry
∗Ashutosh Prasad is Assistant Professor of Marketing at The University of Texas at Dallas.
Bart Bronnenberg is Associate Professor of Marketing at the John E. Anderson Graduate
School of Management, The University of California at Los Angeles. Vijay Mahajan is
the Dean of the Indian School of Business at Hyderabad India. He also holds the John P.
Harbin Centennial Chair in Business in the McCombs School of Business, The University of
Texas at Austin. The authors thank Sridhar Balasubramanian, Rick Briesch and Preston
McAfee for their many helpful suggestions. The paper has benefited from the comments
of seminar participants at the University of Central Florida, the University of Georgia at
Athens, the University of Nebraska, Lincoln, the University of Texas at Dallas and Babson
College.