Preliminary: Please do not cite without permission When to Exit a Product: Evidence from the U.S. Motion-Pictures Exhibition Market

When is it optimal for a multi-product firm to exit a product? We expect the choice to depend fundamentally on intra- and inter-firm strategic considerations. We conduct a robust and novel duration analysis of strategic product exit using data on motion-pictures exhibition choices in a major metropolitan first-run market. Specifically, we estimate the survivor function for films at a given theatre, accounting for within-firm pressures as well as external competitive forces, to determine the factors that influence survival. Based on film-programming data covering from first-run theatres in the Boston metropolitan market from June 30, 2000 through June 28, 2001, duration analyses of the decision to exit a film from a theatre’s offering yield the following results. Intra-firm factors, such as a film’s revenue performance relative to the other films on offer, influence the expected time to exit. Relative performance is measured by such variables as the percentage of revenues a theatre earns in a given week generated by a given film and the rank of a film, based on revenue, relative to the other films on offer in a given week. Both variables have a significant impact on increasing the expected length of time until exit. Further, we find that whether a film is playing at another theatre owned by the same chain rathe