Incentive plans improvement in movie value chain: USA motion picture industry

Abstract

The goal of the research paper is to improve the methodology of incentive plans development in the value chain of a movie using appropriate game theoretical modeling. The tasks of the study are: investigate the motives of cooperation in the movie production on the basis of movie value chain analysis and elicit the weak links in the value chain of a movie with regard to national specificities of motion picture business; improve the methodology of incentive income imputation formation on the basis of appropriate game-theoretical model construction and test it on case studies; improve the methodology realization of the incentive income imputation on the basis of specific revenue-sharing contracts construction, which coordinate the movie value chain and test it on movie value chain case studies; formulate practical recommendations to the movie value chain participants on how to apply the improved methodology for efficient movie value chain construction. As a result, a two-phase methodology for incentives alignment of all major participants of the movie value chain has been elaborated, on the first stage of which the incentive income imputation is constructed, and on the second stage coordinating contracts on income allocation with positive transfer prices are concluded, which motivate the chain participants to maximize the total gain of the chain. The developed methodology can be used as a support tool for decision-making on efficiency improvement on the stages of movie value chain establishment and the justification of parameter values of the contracts among chain participants. The methodology has been tested on cases from the USA motion picture industry, and the specifics of its application with relation to national peculiarities of motion picture industry have been demonstrated.