Media publishers that have commonly relied on profits from advertisements and content sales to fund their operations are not only content providers (manufacturers) to media aggregator platforms (retailers) but are also competing service providers (rival retailers) in the digital video supply chain. Different from a traditional media supply chain, they can easily operate their own direct distribution channels in the Internet era. In the digital video supply chain, it is not clear whether commercialization of the direct distribution channel would be beneficial for the media publisher because it would decrease profits from advertisements. The choice about commercialization should be investigated thoroughly because it is closely related to the media publishers’ sustainability as a public medium in a digital environment. In this study, we analyze the impacts of commercializing the direct distribution channel based on a game-theoretic approach. Specifically, we compare the profits of a media publisher with and without the commercialization of the channel from analyses of sequentially defined games. Our results show that media publishers prefer to use a free service on their direct channel if the content they provide is not highly valued. They can also choose not to provide their content to the media aggregator with a paid service.
Terrestrial broadcasting network is the main delivery platform of terrestrial broadcasters and its coverage represents the capacity. We study economic impacts of coverage on TV service markets, which consist of broadcasters and pay‐TV operators with retransmission, by dividing the market into “inside” and “outside” the coverage.
Our results suggest that the broadcaster ends up with two extreme options in equilibrium: not operating networks or operating networks at a full capacity. However, the former option is not desirable if the retransmission fee changes according to the coverage. On the basis of the main results derived, implications for broadcasters and the government are discussed.
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