Using a game-theoretical approach, this paper develops a duopoly model and examines value-added service (VAS) investments and pricing strategies on video platforms with opposite inter-group network externalities between two groups. We consider two scenarios with VAS investment, namely, a single platform investing in VASs for advertisers (S-Model) and both platforms investing in VASs for advertisers (B-Model). We found the following: (i) In the S-Model, the investing platform’s VAS level remains maximum when the marginal investing cost is low; otherwise, it decreases with the cost. Investing and non-investing platforms’ advertising prices are unaffected by the marginal investing cost if the cost is low; otherwise, the prices decrease and increase with the cost, respectively. Furthermore, the investing platform’s advertising price is higher than the non-investing platform’s. (ii) In the B-Model, the two platforms’ VAS levels remain maximum if the marginal investing cost is low; otherwise, they decrease with the cost. The two platforms’ advertising prices are equal and irrelevant to the marginal investing cost. (iii) The investing platform’s VAS level in the S-Model is higher than or the same as that in the B-Model and the investing platform’s advertising price in the S-Model is higher than that in the B-Model. (iv) Compared to the scenario without VAS investment, the investing platform’s advertising price is higher in the S-Model, but the same in the B-Model.
We explore media platforms’ investment strategies for two-sided beneficial value-added services, which can directly benefit both consumers and advertisers, and ad pricing strategies by using game theory. We consider an asymmetric investment scenario, scenario A, and a symmetric investment scenario, scenario S, and develop game models under each scenario. First, we obtain the equilibrium investments, prices and profits and analyze the influence of the three important parameters—marginal investment costs, positive consumer effects and negative advertising effects, on the equilibrium outcomes in each scenario. Then we compare these equilibrium outcomes between both scenarios. Finally, we conduct numerical simulations to verify the conclusions obtained in both scenarios. We show that in scenario A, the value-added service levels and ad prices of the investment platforms remain constant and then decrease with marginal investment costs. The ad prices and profits of the investment platforms increase (decrease) with positive consumer effects (negative advertising effects). The same change is true for the value-added service levels only under certain conditions. In scenario S, the value-added service levels of the investment platforms change with positive consumer effects or negative advertising effects only when marginal investment costs are high. The ad prices of the platforms always increase with positive consumer effects but increase with negative advertising effects only when marginal costs are low. The profits of the platforms vary monotonically with negative advertising effects, but not necessarily with positive consumer effects. Compared to scenario S, the ad prices of the investment platforms in scenario A are higher, but that is not always true for the value-added service levels.
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