scholarly journals Pricing of Digital Video Supply Chain: Free versus Paid Service on the Direct Distribution Channel

2018 ◽  
Vol 11 (1) ◽  
pp. 46 ◽  
Author(s):  
Yunhyoung Kim ◽  
Jeonghoon Mo

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.

2012 ◽  
Vol 10 (5) ◽  
pp. 277
Author(s):  
Bin Shao ◽  
Kunpeng Li

In this article, we study two manufacturers, each producing a single substituting product, selling the products through their own centralized distribution channels, and also using each others distribution channel at their choice. Distribution channels are also substitutable. Using price competition and a game theoretic approach, we find that the same products can be sold at a higher price in the cross-sale channel than in its own centralized distribution channel. The first mover in doing a cross-sale doesnt necessarily enjoy the advantage in terms of higher profit. Not only manufacturers can charge higher prices for their own and cross-sold product from their competitor, but also cross-sale increases the profits of both manufacturers; and most importantly, cross-sale improves the systems profit dramatically.


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