Video Platforms’ Value-Added Service Investment Strategies for Viewers and Ad Pricing Strategies
- 1 School of Business, East China University of Science and Technology, Shanghai, China
- 2 School of Business, East China University of Science and Technology, Shanghai, China
Abstract
This paper develops a duopoly model in which two free video platforms compete for two groups of users, i.e., viewers and advertisers. We investigate video platforms’ value-added service (VAS) investment strategies and ad pricing strategies under a situation where only one platform invests in value-added service for viewers. The results reveal that: 1) When marginal cost increases, the investment platform’s VAS level and ad price first remain constant and then decrease; the non-investment platform’s ad price first remains constant and then increases. 2) The impacts of the positive effect of viewers on the two platforms’ VAS levels and ad prices are related to the marginal cost. 3) The investment platform’s ad price is higher than the non-investment platform’s. 4) The investment platform’s ad price is higher in the situation with investment than in the situation without investment.
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