Platform Competition in Pay-TV Market

Kasuga, Norihro and Manabu, Shishikura and Masanori, Kondo (2007): Platform Competition in Pay-TV Market.

Abstract

In this paper, we undertake an empirical analysis of the current Japanese pay-TV market, where cable TV carriers and CS digital satellite carriers are the main players. After examining the factors for subscribing to pay-TV and the competitive situation in the market, we have the following findings; (1) Cable TV carriers promote high value-added service provision, such as bundling internet access, and these activities result in competitive superiority over CS carriers. (2) Cable TV carriers receiving bigger investment from local governments tend to gain higher rates of subscription, although they provide smaller numbers of channels with a low charge. (3) The number of terrestrial broadcasting channels which are transmitted via pay-TV carriers can have a large impact on competitive advantage when getting subscribers in the pay-TV market.

• Item Type: MPRA Paper
• Language: English
• Keywords: Platform Competition, Cable Television, Communication Satellite, Pay-TV, subscriber penetration, high-value added service
• Subjects: L - Industrial Organization > L8 - Industry Studies: Services > L82 - Entertainment ; Media; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R22 - Other Demand; L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation

References

Carroll, D. and D. Lamdin (1993) “Measuring Market Response to Regulation of the Cable TV Industry,” Journal of Regulatory Economics, Vol. 5, pp. 385-399. Chipty, T. (1995)‘Horizontal Integration for Bargaining Power: Evidence from the Cable Television Industry,' Journal of Economics and Management Strategy, Vol. 4, No. 2, pp. 375–397. Clements, M. and S. Brown (2006) “The Satellite Home Viewer Improvement Act: Price and Quality Impact of Direct Broadcast Satellite Companies’ Provision of Local Broadcast Stations,” Telecommunications Policy, No. 30, pp. 125-135. Church, J. and N. Gandal (2005) “Platform competition in telecommunications,”Chapter 4, in Majumdar, S., I. Vogelsang, and M. Cave ed. Handbook of Telecommunications Economics, Technology Evolution and the Internet, Vol. 2. Emmons, W. and R. Prager (1997) “The Effect of Market Structure and Ownership on Prices and Services Offerings in the US Cable Television Industry,” RAND Journal of Economics Vol. 28, No. 4, pp. 732-750. Goolsbee, A. and A. Petrin (2004) “The Consumer Gains From Direct Broadcast Sattelites and The Competition with Cable TV” Econometrica Vol.72 No.2 pp.351-381 Haring, J. and J. Rohlfs (2002) “The Disincentives for Broadband Deployment Afforded by the FCC’s Unbundling Policies,” Strategic Policy Research, (http://www.spri.com/pdf/reports/news/disincentivesforbroadbanddeploy.pdf). Hayashi, T. ed. (2003) System of Information Economcs, NTT Publishing Co. (in Japanese). Hazlett, T. (1996) “Cable Television Rate Deregulation,” International Journal of the Economics of Business, Vol. 3, pp. 145-163. Hazlett, T. (1997) “Prices and Outputs under Cable TV Reregulation,” Journal of Regulatory Economics, Vol. 12, pp. 173-195. Hazlett, T. W., and M. L. Spitzer (1997) Public Policy Toward Cable Television: The Economics of Rate Controls. Cambridge, MA: M.I.T. Press. Hoekyun, A. and B. Litman (1997) “Vertical Integration and Consumer Welfare in the Cable Industry,” Journal of Broadcasting & Electronic Media, Vol. 41, pp. 453-477. Jaffe, A., and D. Kanter (1990) “Market Power of Local Cable Television Franchises: Evidence from the Effects of Deregulation,” Rand Journal of Economics, Vol.21, pp. 226-234. Jitsuzumi, T. and A. Nakamura (2002) “A Study of a More Efficient Subsidy Mechanism -- Measuring DEA Efficiencies of Cable Television Networks,”Journal of Public Utility Economics, Vol. 53, No. 3, pp. 11-18 (in Japanese). Karikari, J., S. Brown and A. Abramowitz (2003) Subscriptions for direct broadcast satellite and cable television in the US: an empirical analysis,” Information Economics and Policy, Vol. 15. pp. 1-15. Noam, E. (1985)‘Economics of Scale in Cable Television: A Multiproduct Analysis,' In E.M. Noam, ed., Video Media Competition: Regulation, Economics, and Technology, New York, Columbia University Press. Prager, R. (1992) “The Effects of Deregulating Cable Television: Evidence from the Financial Markets,” Journal of Regulatory Economics, Vol. 4, pp. 347-363. Schmidt, S. (2001) “Market Structure and Market Outcomes in Deregulated Rail Freight Markets,” International Journal of Industrial Organization, Vol 19., pp. 99-131. Shiotani, S. (2006) ”Empirical Analysis on Cable Carriers’ Policy: Widening of Operation Area and Scale Expansion, and Basic Trend of Public Support Reform,” Journal of Public Utility Economics, Vol. 58, No. 1, pp. 35-46 (in Japanese). Shishikura, M., N. Kasuga and A. Torii (2006) “Multimedia, Multichannel and Future of the Broadcasting Market: -- An Analysis on Subscription Demand for Pay-TV --,” Journal of Economic Policy Studies, The Japan Economic Policy Association ed., pp. 60-63 (in Japanese).