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Hollywood Studio Filmmaking in the Age of Netflix: A Tale of Two Institutional Logics

by Hadida, Allègre L., Lampel, Joseph, Joshi, Amit and Walls, W. D.

New online streaming services are challenging long-standing decision-making processes in the traditional motion picture industry, thus placing Hollywood major studios at a crossroads. We use the institutional logics perspective to examine how both traditional studios and new online streaming services make strategic decisions on which films to produce and how these films should be distributed, and scenario analysis to anticipate how their interaction will likely evolve. We argue that the key criteria that studio executives use to make such decisions are shaped by what we define as a commitment institutional logic: decision making heuristics that focus their attention on theatrical release and box office intakes. In contrast, the new online streaming services follow a convenience institutional logic, the product of advanced data analytics to increase subscriptions. In the convenience institutional logic, the need to drive online traffic by providing users with an extensive catalogue of film offerings guides film development and distribution decisions. Whereas the commitment logic aims for mass-market hits in cinemas, the convenience logic seeks to reach a wide range of subscribers at home with micro-segmented content. We compare the two logics, develop four scenarios of how the interaction between them may shape the film industry, and offer recommendations.

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