The Economics of Television and Online Video Markets

Abstract

Television is the dominant entertainment medium for hundreds of millions. This chapter surveys the economic forces that determine the production and consumption of this content. It presents recent trends in television and online video markets, both in the US and internationally, and describes the state of theoretical and empirical research on these industries. A number of distinct themes emerge, including the growing importance of the pay-television sector, the role played by content providers (channels), distributors, and negotiations between them in determining market outcomes, and concerns about the effects of market power throughout this vertical structure. It also covers important but unsettled topics including the purpose for and effects of both the old (Public Service Broadcasters) and the new (online video markets). Open theoretical and empirical research questions are highlighted throughout. JEL: L82, L86, L32, M37, C72, D40, L40, L50

Upstream Bundling and Leverage of Market Power

“…5 On a similar note, upstream TV networks offer bundles of channels to downstream distribution companies and earn advertising revenue when their channel is viewed. Thus, our work speaks to ongoing policy concerns around wholesale bundling in the pay-TV market (see Crawford, 2015, for a discussion, and Cablevision-Viacom for a recent case).…”

Platforms and network effects

“…An early guide to empirical work on two-sided platforms is Rysman (2009). Quite some work has been done in the context of media markets; we refer the reader to the overviews by Chandra and Kaiser (2015), Crawford (2015), and Sweeting (2015).…”

“…How do sellers and buyers surpluses compare in the two environments? 22 In the model in which sellers multihome, platforms hold an exclusive access to their set of singlehoming buyers (the 'bottleneck'), which makes buyers valuable to extract pro…ts on the seller side. We expect thus platforms to compete …ercely for buyers and, in return, to milk sellers.…”