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Price Discrimination Essay

641 words - 3 pages

Price Discrimination Online: Hollywood Goes to the Web

One of the most significant characteristics of the internet is that technology on the web allows for the collection of consumer behavior, attitudes, and profiles. When customers create profiles and make online purchases, behavior patterns and preferences are stored in customer databases, later analyzed to tailor specific services and products that match the customer profile best. The emergence of internet movie downloads will allow the industry to monitor consumer preferences and behavior that includes what they are willing to pay and how often they buy. This is very similar to price discrimination, which can exist when three ...view middle of the document...

This will revolutionize the way they make their profit.
By supplying the movies directly to consumers online, they can also eliminate costs they incur in the current model of distribution. Additionally, distributors can earn more revenue by charging premium prices. For example, they can charge consumers more for the ability to stream new movies before they become available on DVD, and charge less in order to allow them to view older movies. In addition, they can keep customers engaged through monthly plans or pay-per-view giving the consumer several pricing options to choose from. In doing so, the distributor will essentially be a perfect discriminating monopoly. Further, customers who register online can personalize movie playlists and enroll in membership rewards loyalty plans. This could motivate them to watch more movies in the convenience of their own homes versus having to go to the theatre. Reward like free movies will maintain loyalty from these customers.
The movie studios and distributors have recognized that...

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