From this article (Harry Porter’s Dilemma), it is indeed clear that Sirius faces an impounding dilemma on elaborately choosing a game strategy that shall look convincing to Warner Bros (WB). The strategy should bestow the prospected earnings of a yet-to-be released film sequel, Harry Potter and the Deathly Hallows Part 2. The game is defined by two established and very powerful players in Hollywood film industry: WB and Paramount Pictures (or Paramount).
Over the years, it has been established that the simultaneous release of two films by these companies almost always results in a noticeable reduction the anticipated revenue. This especially happens during the first weekend of the film’s release in summer (films can be released in summer and winter). The preferred payoff game strategy is the one that guarantees WB a better and desirable scope in the Box Office. Herein, an elaborate discussion is devised to explicate the game theory dynamics presented as Sirius struggles to choose the best and convincing strategy.
Strategies and Situational Analyses
In the establishment of a game theory for the application in decision making, the Nash equilibria is determined as a fundamental prerequisite to the determination of fundamental strategies to be employed by both companies as they are set to release Harry Porter and Transformers3. The Nash equilibria shall determine choices in which either company shall not which to change or deviate from once the choice has been made. In order to build a firm ground for the game theory strategies to be presented herein, the current situation is explained and its results are used to create the strategies.
WB has planned to release Deathly Hallows sequel two weeks after Paramount releases its third Transformers series. The performance of films has (over the years) has been seen to be affected by the simultaneous release by another company. In order to increase the revenue earned by Deathly Hallows, WB considered changing the film into 3D and has already invested time and money into this. However, the 3D aspects of Deathly Hallows Part 2 are incomparable to those of Transforms because it was developed from its 2D format. Moreover, with presentations impounded to approximately 4,200 theatres in USA, WB expects to breakeven with the film’s budget of 350 million dollars.
However, according to Sirius, the situation looks even gloomy considering a strategy whereby Paramount may consider moving the release date of Transformers nearer to Deathly Hallows. This move is considered probable based on the assumptions of the better 3D quality in Transformers and the fact that the film itself is the last in series of a very popular film. Therefore, simultaneous releases will most likely lead to an impeding and undesired division of revenue as clients will be profoundly divided into choosing between the two films.
On the other hand, the choices or strategies and their resultant payoffs by Paramount can be termed as straightforward. Releasing Transformers two weeks before or in simultaneity with WB’s Harry Potters will most likely influence competition in their favor. To breakeven (at a budget of 295 million dollars in 4000 cinemas) and garner a desired position in the Box Office, Paramount is liable to considering a simultaneous release.
In this non-cooperative game, the Nash equilibria set of strategies for WB comprise the choice of a release date (which happens to form the profound dilemma Sirius is facing). Move A by WB is to defer on the current release date and reschedule it to the start of winter in November. Move B (to be supported by Sirius) will involve choosing the current release date; that is, two weeks after the release of Transformers. Bear in mind that Move B must be supported by Sirius on the basis that WB will breakeven, for instance, since an early release (by two weeks) will give a chance for the frenzy attributed to Transformers to ebb out. Move C (recommended to Sirius) is to release Deathly Hallows Part 2 two weeks after Transformers in 3D.
The second set of strategy profile shall be effected by Paramount. In this strategy profile, a speculation is made. In Move A, Paramount shall consider sticking to its current release date (that is, two weeks before the release of Harry Potter. The second move (Move B) will involve rescheduling it to an approximate time to coincide with that of WB. Move C shall involve releasing the 3D film concurrently with Harry Potter but making the competition biased by advertising the better 3D quality of Transformers relative to that of Harry Potter (which is consider to be have a lower quality on the basis that it was developed from its 2D version).
The Game and Recommendations to Sirius
From the foregoing elaboration, two sets of strategies (three for each company) are available to Paramount and WB. If WB takes Move A, then Paramount is mostly likely to stick with its current release date (that is, Move A). However, in such a scenario, Sirius speculates that it might render a demeaning opinion to potential of revenue generation by Harry Potter. In such a scenario, move A possesses the game theory characteristic of incomplete information. Statistics have indeed shown that the concurrent releases of Harry Potter over the first decade of the 21st century have indeed had a toll on the performance of the consequent sequels when compared to the original first release. However, this does not necessarily mean that move B or C by WB will be overshadowed completely by the performance of Transformers in the Box Office. Furthermore, move A by WB may make Paramount consider the equilibria move A since no external market forces from WB shall be present.
In comparison, the unfortunate thing about moves B and C for WB is that they all present some exposure to competition by Paramount. They also offer two strategies that Paramount may employ in albeit simultaneously in order to have an upper hand in the competition. These moves are B and C. However, the competition will be favorable for Paramount if it chooses C. This is supported by the performance of 3D films such as Avatar (comparable to Transformers) in theaters.
Thus, move A by WB shall constrain Paramount to move A. This may be advantageous to WB since the competition from Transformers shall be eliminated. However, it is a situation of incomplete information since circumstances may change in November. For instance, if a new film is released by Paramount. Nevertheless, the current comparison only involves the popularity of sequels that Paramount may lack at the start of winter. Move B and C by WB presents dilemmas for Sirius and WB at large. This is because, they will openly expose WB to unfavorable revenue division when Paramount chooses moves B or C.
Thus, it comes without doubt that move A is indeed the best for WB. First of all, WB releases its films twice a year (in November and July). Thus, rescheduling the Harry Potter for November shall pose little harm to the company. Furthermore, Sirius should also consider the current portfolio of films scheduled to be released by WB after the release of Transformers. WB should never release two of its own films simultaneously. This is because one may reduce the revenue of the other by mere competition. Choosing move A will limit Paramount to its move A. The opinion by Sirius that it may render Harry Potter to speculations over its potential can be considered as subjective if the film is taken on its utility as a sole product released into the market in November.
Finally, Move C is the weakest move that WB can ever consider. This is because the characteristics of the 3D version of Harry Potter have grown frail in the opinion of customers based on reports from prior 3D versions. Transformers is unique because it has been given the real touch of 3D cameras while shooting and was thus not converted from its 2D version.
From the above discussions, it has been seen using game theory in respect to non-cooperative games that the best strategy for WB is move A. The other two moves are somewhat the same but place two different and unique scenarios of competition. Move C by WB is seen as the weakest since its 3D version, especially on the Harry Potter sequel have been termed as frail over the past years.
Furthermore, move A shall limit Paramount to move A and thus reduce the over competition all together when November’s release dates are preferred. Also, moves B and C by Paramount are quite stronger and unfavorable to WB’s Deathly Hallows Part 2. Thus, in this game theory, the two players have had a description of their equilibria strategies and the outcomes or rewards. The pure strategies in the following discussion as somewhat straight forward and the rewards are comparable. However, there is incomplete information on the performance of the market for Harry Potter during its release date in November.
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