On the Multi-Picture Agreement: An Investor’s Perspective

Abstract

We investigate the diverse aspects of the multi-picture agreement (MPA) of the film industry, such as its risk, competition of investors, and the bargaining power. We find that, in general, MPA does not lower risk or increase the expected return. This implies that an investor prefers no MPA to MPA, when risk and return are concerned. However, an investor may prefer MPA if a competitive investor exists, or if the bargaining power is affected by the performance result of the first film.