The impact of tecchnological advancements on intermediaries in the motion picture industry.

Abstract

The main research objective of the dissertation is to systematically capture and explain those changes in a particular sector of the media industry that are triggered through technological advancements and have an impact on intermediation. Intermediation is an economic concept, which has proven its usefulness in the analysis of certain industries such as the trade or the financial service sector. However, the microeconomic-based concept of intermediation is typically not used for the analysis of technology-driven changes. In order to achieve the aforementioned objective, a new approach, namely, the Intermediation Analysis Approach is developed over the course of the dissertation and applied to a sample sector. The motion picture industry has been selected for this as intermediaries such as sales agencies and distributors traditionally play an important role. In addition, the motion picture sector has witnessed numerous technological advancements in the past and is thus perfectly suited for an ex-post analysis of the last fifteen years. In addition, intermediaries in the motion picture industry received little attention so far in literature. The theoretical foundation established at the beginning of the dissertation is from paramount importance for the development of the Intermediation Analysis Approach. Industrial Economics is used as the theoretical frame of reference. Industrial Economics provides a suitable frame of reference for the research objectives and questions of this dissertation, as it is characterized by a high degree of reality. In this context, the theory of the firm is particularly important and is therefore discussed in detail from different viewpoints. In addition to the theory of the firm, the large volume of literature on intermediaries is also highly relevant for establishing the theoretical foundation. This includes findings from various research strands on intermediation, including, but not limited to, the trade and marketing literature as well as the literature on financial intermediation In the course of the analysis, the activities of intermediaries, the value provided by intermediaries and the incentives to cooperate with intermediaries are identified as the key factors that have to be examined. All these facets are incorporated into the Intermediation Analysis Approach and tools are developed for each facet. The analysis approach itself thus consists of four steps: (1) the analysis of industry characteristics (incl. the value added structure in order to identify intermediaries), (2) the analysis of the activities performed by intermediaries, (3) the analysis of the value provided by intermediaries and (4) the incentives to cooperate with intermediaries. The tools of the analysis approach employ comparative statics analysis to examine the impact of technological advancements at two distinct points in time. By examining each facet in detail, the impact of technological advancements on intermediaries can be determined and explained. While the Intermediation Analysis Approach can be employed in a variety of use cases. It is used ex-post for the analysis of the motion picture industry where the status quo of intermediaries in 1999 is compared to their status in 2014. The objective of the application of the analysis approach is to answer a variety of practical research questions for the motion picture industry. Even more importantly, the applicability of the Intermediation Analysis Approach is demonstrated. The results of the analysis show that some interesting developments have occurred. Many of which received little attention or are contrary to what some researchers predicted in the past. The analysis results show, that the activities of most intermediaries have not been directly influenced by technological advancements. Particularly the activities on the informational level still require a high degree of specialization and experience. In regards to the value that intermediaries in the motion picture sector provide and its change in the last fifteen years, the results of the analysis reveal a variety of value sources, which enable intermediaries to add value. The contact reduction based on the Baligh-Richartz-Effect, standardization, scale effects and specialization are the most prominent value sources that enable the intermediaries in the motion picture industry to increase the transaction efficiency. Technological advancement did not reduce the strength of most value sources. In regards to the incentives and disincentives of up- and downstream market participants to cooperate with intermediaries, the analysis results show that a variety of incentives and disincentives can be identified. However, in most cases the cooperation is not optional, often for both of the intermediary’s transaction partners. Nevertheless, the analysis still reveals noteworthy incentives and disincentives. The most prominent one is the observation that the decrease in transaction costs and increase in transaction efficiency is in the interest of the involved transaction partners as well. Since most intermediaries’ ability to increase efficiency improved in the examined timeframe, the incentives to cooperate with them grew stronger as well.