Seasonality and Competition in Time: An Empirical Analysis of Release Date Decisions in the U.S. Motion Picture Industry∗

Strong seasonality in demand, a short product life cycle, and the absence of any price competition make the release date of first-run movies one of the main strategic decisions taken by movies’ distributors. These endogenous timing decisions, in turn, generate a strong seasonal pattern of release dates. Therefore, the observed seasonal pattern of sales is a combination of both seasonality in underlying demand and seasonal variation in the quality of movies released. In analyzing the strategic timing game over the release dates of movies one ought to take the endogeneity of release dates into account and break down the observed seasonal pattern of sales into these two component. The absence of good observable measures of product quality creates a difficulty in separately identifying the two layers of seasonal pattern. In this paper I identify these layers by estimating weekly demand for movies, using movie fixed-effects, a long panel of movies’ weekly revenues, and reasonable restrictions on their decay pattern. I find that the estimated seasonal effects in underlying demand are much smaller and quite different from the observed seasonal pattern of sales. I then use the demand estimates to construct and to structurally estimate a timing game played by distributors. The results suggest that the perceived (by distributors) seasonal pattern in underlying demand that rationalizes the observed release pattern is most closely related to the observed seasonal pattern of sales and not to the estimated underlying demand. This implies, for example, that distributors may significantly increase their revenues by pushing some of their Memorial Day releases to