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Challenging content exclusivity in network industries The case of digital broadcasting  <br />Tom Evens<br />Ghent Univers...
Exclusivity of content<br /><ul><li>Long considered as optimal strategy
 Guarantee remuneration of investments in
 Content production (right holders)
 Platform infrastructure (distributors)
But still profitable and sustainable in network industries, in casu digital television broadcasting?</li></li></ul><li>Net...
Direct externalities: similar users</li></ul>  e.g. mobile phones, social network sites<br /><ul><li> Indirect externaliti...
 Four key business roles
Demand-side users (viewers)
Supply-side users (content providers)
Platform owners (content aggregators)
Platform sponsors (e.g. CAS & equipment providers)</li></li></ul><li>Chicken-and-egg problem<br /><ul><li>Interaction betw...
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Tom Evens: "Challenging content exclusivity in network industries"

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Transcript of "Tom Evens: "Challenging content exclusivity in network industries""

  1. 1. Challenging content exclusivity in network industries The case of digital broadcasting <br />Tom Evens<br />Ghent University, Belgium<br />Media & ICT Research Group (MICT)<br />Interdisciplinary Institute for Broadband Technology (IBBT)<br />2010 European Regional ITS Conference<br />Copenhagen, Denmark, September 13-15, 2010<br />
  2. 2. Exclusivity of content<br /><ul><li>Long considered as optimal strategy
  3. 3. Guarantee remuneration of investments in
  4. 4. Content production (right holders)
  5. 5. Platform infrastructure (distributors)
  6. 6. But still profitable and sustainable in network industries, in casu digital television broadcasting?</li></li></ul><li>Network industries<br /><ul><li>Value of a network is proportional to the number of connected users
  7. 7. Direct externalities: similar users</li></ul> e.g. mobile phones, social network sites<br /><ul><li> Indirect externalities: different users</li></ul> e.g. broadcasters, newspapers <br /><ul><li> Demand depends not only on price, but also on expected number of users </li></li></ul><li>Platformisation of industries<br /><ul><li>Platform-based intermediaries
  8. 8. Four key business roles
  9. 9. Demand-side users (viewers)
  10. 10. Supply-side users (content providers)
  11. 11. Platform owners (content aggregators)
  12. 12. Platform sponsors (e.g. CAS & equipment providers)</li></li></ul><li>Chicken-and-egg problem<br /><ul><li>Interaction between different markets
  13. 13. Viewers/subscribers
  14. 14. Content providers
  15. 15. Advertising agencies
  16. 16. Chicken-and-egg problem
  17. 17. Exclusive premium content
  18. 18. Critical mass for platform development</li></li></ul><li>Exclusivity as business strategy<br /><ul><li>Access to premium content is bottleneck
  19. 19. First movers signed exclusive dealings
  20. 20. Differentiation from competitors
  21. 21. Raise entry barriers for rivalling platforms
  22. 22. Foreclose markets and limit competition
  23. 23. ‘Winner takes all’: competition for the market
  24. 24. Request for exclusivity led to excessive prices
  25. 25. Origin and not consequence of high costs</li></li></ul><li>Exclusivity contested<br /><ul><li>Delayinvestmentsalternativeinfrastructures
  26. 26. Hamperinnovation in platform features
  27. 27. Hinder competitionin the market
  28. 28. Harm consumer welfare at industryexpense
  29. 29. Does notreflect the platform-based model</li></ul>Non-exclusive distribution remains welfare optimum for all stakeholders in the game <br />
  30. 30. Regulations and public policies<br /><ul><li>EuropeanCommission case law
  31. 31. UEFA Champions League
  32. 32. National regulatorydecisions
  33. 33. OfcomDecision (2010) oncompetition in pay-tv
  34. 34. Demanding dominant player to sellitssportsnetworks to competingcable and terrestrialnetworks
  35. 35. Complaintsthatexclusivecontrol over broadcastingrightscreatedviciouscircle hindering competition and keepingpricesartificially high</li></li></ul><li>New business model<br /><ul><li>Regarding exclusivity, diverging interests btw
  36. 36. Right holders (maximal diffusion)
  37. 37. Distributors (entry barriers)
  38. 38. If part of same group (VI), problematic issue
  39. 39. Platform-based broadcasting model
  40. 40. Affiliate to multiple platforms (shared access)
  41. 41. Retail model (subscription, pay-per-view)
  42. 42. Revenue sharing (royalties, per-user fees)</li></li></ul><li>A Dutch example<br />€9.49<br />€10<br />€14.95<br />€6.99<br />€12.5<br />
  43. 43. Platform benefits<br /><ul><li> Rights holders & content producers
  44. 44. Revenues may grow with number of viewers
  45. 45. Platform owners & distributors
  46. 46. Incentives for alternative platforms & innovation
  47. 47. New USPs such as pricing, programming variety, quality of service, customer support
  48. 48. Viewers & subscribers
  49. 49. Non-discriminatory access to variety of content
  50. 50. Tighter competition should lead to lower prices</li></li></ul><li>Thanks for listening<br />[E]: Tom.Evens[AT]UGent.be<br />[W]:http://www.mict.be<br />
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