Project Alliances

Movie Industry: Choosing a Co-finance

Stages of Movie Project

Screen writing & development

Assembly of a creative team

Pre-production

Production

Post-production

Distribution

Financing

Solely Financed

• Financed by one

entity only.Strategic

Alliances

• One-pot deals

• Two-pot deals

Motives behind Alliances

Risk reduction hypothesis

Internal Capital market hypothesis

Managerial bargaining power hypothesis

Market structure hypothesis

Resource pooling hypothesis

Specialization hypothesis

Lemon hypothesis

Research Basis

A sample of 275 films produced by 12 major studios

Assembled two datasets at the movie level

One consists of co-financed films and the other solely financed films

Variables taken in account

Variables

Project risk variables

Managerial bargaining

power variables

Resource-pooling

variablesSpecialization and lemons

variablesMarket structure variable

Comparison

Movie Industry Alliances

Alliances form after R&D

Time consuming

Inexpensive

Bio-Tech Industry Alliances

Alliances are formed before R&D

Less time consuming

Expensive

Findings

Solely Financed: Less RiskyStrategic Alliance: More Risky

Performance doesn’t significantly differ in both cases

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