TY - JOUR
T1 - Pricing and content development for online media platforms regarding consumer homing choices
AU - Wu, Cheng Han
AU - Chiu, Yun Yao
N1 - Funding Information:
The authors thank the anonymous referees for their constructive comments and suggestions, which significantly enhanced the paper. This research was partially supported by the Ministry of Science and Technology, Taiwan , R.O.C. under # MOST 108-2221-E-006-222-MY3 and “Center for Innovative FinTech Business Models” of National Cheng-Kung University (NCKU), sponsored by the Ministry of Education, Taiwan, R.O.C. .
Publisher Copyright:
© 2022 Elsevier B.V.
PY - 2023/2/16
Y1 - 2023/2/16
N2 - With the rise of online media platforms, intensified competition has forced platforms to develop their content and even to cooperate with rival platforms. It is worth exploring the effects of multihoming, a key feature in platform businesses, on platform strategies and decision-making. In this paper, we establish a game-theoretic model in which two competing platforms generate profits from consumer subscriptions, and consumers decide to subscribe to one (singlehoming) or both (multihoming) platforms. In addition, we examine whether multihoming leads to negative synergy because of the content overlap between the platforms but mitigates price competition, where a platform that can create new content itself decides whether to distribute the content exclusively or to cooperate with the rival by licensing the newly developed content. We derive the equilibrium price and content decisions of the platforms and further elaborate their optimal strategic choices regarding content development and distribution. We find that in the absence of multihoming, developing exclusive content is an efficient competitive strategy for platforms but may cause worse social welfare than would be the case without the development of new content. However, in the presence of multihoming, developing exclusive content is a dominant strategy that benefits platforms, consumers, and society. Managerial insights are provided for platform managers in terms of the rival reactions and changes in content-and market-related factors.
AB - With the rise of online media platforms, intensified competition has forced platforms to develop their content and even to cooperate with rival platforms. It is worth exploring the effects of multihoming, a key feature in platform businesses, on platform strategies and decision-making. In this paper, we establish a game-theoretic model in which two competing platforms generate profits from consumer subscriptions, and consumers decide to subscribe to one (singlehoming) or both (multihoming) platforms. In addition, we examine whether multihoming leads to negative synergy because of the content overlap between the platforms but mitigates price competition, where a platform that can create new content itself decides whether to distribute the content exclusively or to cooperate with the rival by licensing the newly developed content. We derive the equilibrium price and content decisions of the platforms and further elaborate their optimal strategic choices regarding content development and distribution. We find that in the absence of multihoming, developing exclusive content is an efficient competitive strategy for platforms but may cause worse social welfare than would be the case without the development of new content. However, in the presence of multihoming, developing exclusive content is a dominant strategy that benefits platforms, consumers, and society. Managerial insights are provided for platform managers in terms of the rival reactions and changes in content-and market-related factors.
UR - http://www.scopus.com/inward/record.url?scp=85130951578&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85130951578&partnerID=8YFLogxK
U2 - 10.1016/j.ejor.2022.05.030
DO - 10.1016/j.ejor.2022.05.030
M3 - Article
AN - SCOPUS:85130951578
SN - 0377-2217
VL - 305
SP - 312
EP - 328
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 1
ER -