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TV Wars: Exclusive Content and Platform Competition in Pay TV

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  • Weeds, Helen

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.

Suggested Citation

  • Weeds, Helen, 2012. "TV Wars: Exclusive Content and Platform Competition in Pay TV," CEPR Discussion Papers 8781, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8781
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    Cited by:

    1. Etro, Federico, 2021. "Device-funded vs ad-funded platforms," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    2. Kiho Yoon, 2020. "Upstream competition, exclusive content provision, and vertical integration in media markets," Discussion Paper Series 2009, Institute of Economic Research, Korea University.
    3. Etro, Federico, 2016. "Research in economics and industrial organization," Research in Economics, Elsevier, vol. 70(4), pages 511-517.
    4. Antonio Russo & Anna D'Annunzio, 2013. "Network Neutrality, Access to Content and Online Advertising," KOF Working papers 13-344, KOF Swiss Economic Institute, ETH Zurich.
    5. Brito, Duarte & Tselekounis, Markos & Vasconcelos, Helder, 2019. "Input price discrimination in the presence of downstream vertical differentiation," Economics Letters, Elsevier, vol. 184(C).
    6. Rodrigo Montes & Wilfried Sand-Zantman & Tommaso Valletti, 2019. "The Value of Personal Information in Online Markets with Endogenous Privacy," Management Science, INFORMS, vol. 65(3), pages 1342-1362, March.
    7. Jarle Kind, Hans & Nilssen, Tore & Sørgard, Lars, 2010. "Price Coordination in Two-Sided Markets: Competition in the TV Industry," Memorandum 18/2010, Oslo University, Department of Economics.
    8. Anna D'Annunzio, 2013. "Vertical Integration in Two-Sided Markets: Exclusive Provision and Program Quality," DIAG Technical Reports 2013-16, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    9. Ke Rong & Yong Lin & Boyi Li & Thommie Burström & Lynne Butel & Jiang Yu, 2018. "Business ecosystem research agenda: more dynamic, more embedded, and more internationalized," Asian Business & Management, Palgrave Macmillan, vol. 17(3), pages 167-182, July.
    10. Rong, Ke & Xiao, Fei & Zhang, Xiaoyu & Wang, Jingjing, 2019. "Platform strategies and user stickiness in the online video industry," Technological Forecasting and Social Change, Elsevier, vol. 143(C), pages 249-259.
    11. Carroni, Elias & Paolini, Dimitri, 2020. "Business models for streaming platforms: Content acquisition, advertising and users," Information Economics and Policy, Elsevier, vol. 52(C).
    12. Subhasish M. Chowdhury & Stephen Martin, 2017. "Exclusivity and exclusion on platform Markets," Journal of Economics, Springer, vol. 120(2), pages 95-118, March.
    13. Stennek, Johan, 2014. "Exclusive quality – Why exclusive distribution may benefit the TV-viewers," Information Economics and Policy, Elsevier, vol. 26(C), pages 42-57.
    14. David Bounie & Antoine Dubus & Patrick Waelbroeck, 2018. "Selling Strategic Information in Digital Competitive Markets," Working Papers hal-01794886, HAL.
    15. Harald Nygard Bergh & Hans Jarle Kind & Bjørn-Atle Reme & Lars Sørgard, 2012. "Competition between Content Distributors in Two-Sided Markets," CESifo Working Paper Series 3885, CESifo.
    16. David Bounie & Antoine Dubus & Patrick Waelbroeck, 2018. "Selling Strategic Information in Digital Competitive Markets," CESifo Working Paper Series 7078, CESifo.
    17. Yunhyoung Kim & Jeonghoon Mo, 2018. "Pricing of Digital Video Supply Chain: Free versus Paid Service on the Direct Distribution Channel," Sustainability, MDPI, Open Access Journal, vol. 11(1), pages 1-14, December.
    18. Evens, Tom, 2010. "Challenging content exclusivity in network industries: the case of digital broadcasting," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 12, International Telecommunications Society (ITS).
    19. E. Carroni & D. Paolini, 2019. "The business model of a streaming platform," Working Paper CRENoS 201902, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    20. D’Annunzio, Anna, 2017. "Vertical integration in the TV market: Exclusive provision and program quality," International Journal of Industrial Organization, Elsevier, vol. 53(C), pages 114-144.
    21. Vendrell-Herrero, Ferran & Gomes, Emanuel & Collinson, Simon & Parry, Glenn & Bustinza, Oscar F., 2018. "Selling digital services abroad: How do extrinsic attributes influence foreign consumers’ purchase intentions?," International Business Review, Elsevier, vol. 27(1), pages 173-185.
    22. Budzinski, Oliver & Gänßle, Sophia & Kunz-Kaltenhäuser, Philipp, 2019. "How does online streaming affect antitrust remedies to centralized marketing? The case of European football broadcasting rights," Ilmenau Economics Discussion Papers 128, Ilmenau University of Technology, Institute of Economics.
    23. Jullien, Bruno & Reisinger, Markus & Rey, Patrick, 2019. "Personalized Pricing and Distribution Strategies," TSE Working Papers 19-995, Toulouse School of Economics (TSE), revised Sep 2020.
    24. Madden, Paul & Pezzino, Mario, 2019. "Endogenous price leadership with an essential input," Games and Economic Behavior, Elsevier, vol. 118(C), pages 47-59.

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    More about this item

    Keywords

    exclusivity; foreclosure; pay TV;
    All these keywords.

    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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