Abstract

Purpose - High quality films are affected by both the production stage and various variables such as the size of the movie investment and marketing that changes consumers' perceptions. Consumer preferences should be recognized first to ensure that the movie is successful. If a film is produced without pre-investigation and analysis of consumer demand and taste, the probability of success will be low. This study investigates the balance of production costs, marketing costs, and profits using game theory, suggesting an optimization strategy using the simplex method of linear programming. Research design, data, and methodology - Before the release of the movie, initial demand is assumed to be driven largely by marketing costs. In the next phase, demand is assumed to be driven purely by a movie's production cost and quality, which might also further determine consumer demand. Thus, it is essential to determine how to distribute pure production costs and other costs (marketing) in a limited movie production budget. Moreover, it should be taken into account how to optimally distribute under the assumption that the audience and production company's input resources are limited. This research simplifies the assumptions for large-scale and relatively small-scale movie investments and examines how movie distribution participant profits differ when each cost is invested differently. Results - When first movers or market leaders have to choose both quality and marketing, it has been proven that pursuing a strategy choosing only one is more likely than choosing both. In this situation, market leaders should maximize marketing costs under the premise that market leaders will not lag their quality behind the quality of second movers. Additionally, focusing on movie marketing that produces a quick effect while ceding creative activity to increase movie quality is a natural outcome in the movie distribution environment since a cooperative strategy between market competitors is not feasible. Conclusions - Government film development policy should ignore quality competition between movie production companies and focus on preventing marketing competition. If movie production companies focus on movie production quality improvement then a creative competition would ensue.