TV Wars: Exclusive Content and Platform Competition in Pay TV

Helen Weeds

No 8781, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper examines incentives for exclusive distribution of premium television content such as live sports and Hollywood movies. Static analysis shows that a pay TV operator with premium content always chooses to supply its retail rival, using per-subscriber fees to soften competition. Incorporating platform competition, however, exclusive content gives its holder a market share advantage that is amplified by dynamic effects. Under some conditions this benefit outweighs the opportunity cost of forgone wholesale fees, making exclusivity the equilibrium choice. The analysis explains the observed incidence of content exclusivity in pay TV. Specific dynamic mechanisms are explored, and welfare and policy implications are discussed.

Keywords: exclusivity; foreclosure; pay TV (search for similar items in EconPapers)
JEL-codes: D43 L13 L41 L82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com and nep-cul
Date: 2012-01
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