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TV Wars: Exclusive Content and Platform Competition in Pay TV

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  • Helen Weeds

Abstract

The paper examines incentives for exclusive distribution of premium television content such as live sports and Hollywood movies. Static analysis shows that a pay TV operator with premium content always chooses to supply its retail rival, using per-subscriber fees to soften competition. Incorporating platform competition, however, exclusive content gives its holder a market share advantage that is amplified by dynamic effects. Under some conditions this benefit outweighs the opportunity cost of forgone wholesale fees, making exclusivity the equilibrium choice. The analysis explains the observed incidence of content exclusivity in pay TV. Specific dynamic mechanisms are explored, and welfare and policy implications are discussed.
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Suggested Citation

  • Helen Weeds, 2016. "TV Wars: Exclusive Content and Platform Competition in Pay TV," Economic Journal, Royal Economic Society, vol. 126(594), pages 1600-1633, August.
    • Handle: RePEc:wly:econjl:v:126:y:2016:i:594:p:1600-1633
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    File URL: http://hdl.handle.net/10.1111/ecoj.2016.126.issue-594
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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