DocumentCode
1778868
Title
When to sell premium digital contents through the rival platform?
Author
Yifan Dou
Author_Institution
Sch. of Econ. & Manage., Beihang Univ., Beijing, China
fYear
2014
fDate
25-27 June 2014
Firstpage
1
Lastpage
6
Abstract
Digital contents, such as applications, ebooks, and video stream, etc., are playing an increasingly significant role in the electronic commerce nowadays. System providers who sell both hardware platform and digital contents may strategically choose the the provisioning strategy for their digital contents in the competition of hardware market. This paper discusses the effectiveness of a novel strategy under which the system provider grants the access to her premium digital contents through the rival platform. I employ a stylized game-theoretical model by considering two competing systems providers who are vertically-differentiated in hardware market while one of them has advantages in the digital content offerings (i.e., premium contents). The results suggest that superior and inferior platforms largely differ in controls of premium contents: 1) It is always optimal for the inferior platform to sell the digital content through superior platform. Specifically, the inferior platform should target superior platform´s market for content sales rather than extending the low-end market with premium contents; however, 2) the superior platform should consider a pure bundling strategy to further differentiate her platform when the premium is low. These implications are consistent with the practice of Amazon.com and Microsoft, while providing useful guidelines for decision-making process of system providers.
Keywords
electronic commerce; game theory; sales management; Amazon.com; Microsoft; content sales; decision-making process; electronic commerce; hardware market; hardware platform; low-end market; premium digital contents; pure bundling strategy; rival platform; stylized game-theoretical model; system providers; Educational institutions; Electronic publishing; Equations; Hardware; Nash equilibrium; Pricing; Software; digital contents; pricing strategy; product bundling; system competition;
fLanguage
English
Publisher
ieee
Conference_Titel
Service Systems and Service Management (ICSSSM), 2014 11th International Conference on
Conference_Location
Beijing
Print_ISBN
978-1-4799-3133-0
Type
conf
DOI
10.1109/ICSSSM.2014.6874133
Filename
6874133
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