TV Wars: Exclusive Content and Platform Competition in Pay TV1. (4th April 2015)

• Record Type: Journal Article
• Authors: Weeds, Helen
• Is Part Of: Economic journal. Volume 126:Number 594(2016)
• Page Start: 1600
• Page End: 1633
• Publication Date: 2015-04-04
• Subjects: Economics -- Periodicals; Économie politique -- Périodiques; 330.05
• DOI: 10.1111/ecoj.12195
• Languages: English
• ISSNs: 0013-0133

Abstract

Abstract : The article examines incentives for exclusive distribution of premium television programming. Static analysis shows that a vertically integrated operator with premium programming always supplies this content to the rival distributor, using per‐subscriber fees to soften competition. In a dynamic setting with switching costs exclusivity confers a market share advantage, benefiting the operator in the future. Under certain conditions this future benefit outweighs the opportunity cost of forgone wholesale fees, making exclusivity the preferred choice. Alternative dynamic mechanisms are explored, identifying essential features. The analysis explains the observed incidence of content exclusivity in pay TV and provides guidance for policy makers.