530 / 2024-04-25 19:56:04

Encroachment of the Content Provider and Self-Production of the Platform

Content Provider,Encroachment,Self-Production,Platform

With the rapid development of the streaming industry, an increasing number of streaming platforms, such as Netflix and Amazon Prime Video, have started to produce their own content, while content providers in the upstream content market, such as Disney+ and HBOMax, have also started to invade the streaming platform market and launch their own streaming platforms. Motivated by the streaming industry trend, we develop a game-theoretical model to investigate whether the content provider should invade the streaming platform market and whether the incumbent platform should produce its own content in collaboration. Our results reveal several insights. First, we find that a higher content licensing fee not only hurts the platform's profit, but also may hurt the content provider's profit. Additionally, we also find that under collaboration, consumers' preference for the incumbent platform's self-produced content may further hurt incumbent platforms' profit but benefit the third party's profit. Second, contrary to our intuition, it is surprising that a higher content licensing fee would actually discourage the incumbent platform from creating its own content when consumers are not interested in the incumbent platform's self-produced content in the collaboration. Third, we reveal that under collaboration, the incumbent platform's self-production not only hurts its own profit, but also potentially hurts the content provider's profit. Fourth, we find that higher content licensing fee may further motivate the content provider to encroach.   Finally, competition may bring more profits to both the incumbent platform and content provider than monopoly (collaboration).