The Impact of Early International Digital Release of Films on U.S. Box Office Revenues

For film studios, the development of new digital distribution channels has created new opportunities and challenges, which are in particularly stark contrast in the Chinese market. In recent years, Hollywood studios have responded to China’s film import quota and widespread piracy by releasing some films on Chinese digital streaming platforms, in many cases while the film is still showing in the U.S. box office. Though the selection of such films was not random, we identified and controlled for several confounding factors that may lead to selection bias, and then used a difference-in-differences strategy to identify the causal effect of early Chinese digital release on the sales revenues in the U.S. box office. Our results show that the early release on Chinese digital streaming platforms does in fact lead to early appearance of piracy. However, this piracy does not seem to cannibalize U.S. box office revenues