tv on mobility as a two-sided platform marc ivaldi university of toulouse (idei), ehess and cepr...
TRANSCRIPT
TV on Mobility as a Two-Sided TV on Mobility as a Two-Sided PlatformPlatform
Marc IvaldiUniversity of Toulouse (IDEI), EHESS and
CEPR
Estelle Malavolti-GrimalENAC and University of Toulouse
(GREMAQ)
Conference on Competition Policy in Two-Sided Markets
Toulouse - June 29/30th - July 1st, 2006
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A new marketA new market
● Demand 1.7 billion mobile subscribers
Korean market, US market, European markets Short duration Mobility Monthly fee = $ 20 ; price per program = 50 cents
Higher willingness-to-pay
● Supply Type of content
Classical TV Dedicated content (“mobizode”)
High cost for the tuner ($ 600) Technological issues
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Features of the mobile TV marketFeatures of the mobile TV market
● Enlarged market
● Two-sided market
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Enlarged MarketEnlarged Market
● Episodes of mobility Larger potential usage wrt to classical TV
● Conclusions Better and larger audience of advertising
Potential profits for the mobile operator
Higher willingness-to-pay for TV Potential profits for the mobile operator
– Customers / consumers accept more advertising
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Telcom Operators
Consumers Advertising & TV
Two-sidedMarket
Purchase of broadcasting
time / advertising
(Quantity : price)
Operators provide a platform that makes contact between …
Purc
hase
/ sa
le
TV d
urat
ion
(qua
ntity
/ pr
ice)
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Two-sided MarketTwo-sided Market
● Existence of externalities Consumers want to consume TV broadcasts
Positive externality Consumers don’t want to consume advertising
Negative externality
● Conclusion The more advertising, the less TV broadcast Arbitrage
Higher price of ads, higher demand of advertising duration
– Increase of profits on the side of TV broadcasters/channels BUT– Decrease of profits on the side of consumers
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LiteratureLiterature
●Two-sided markets Rochet-Tirole 04, 03 Armstrong 02 Crampes-Haritchabalet-Jullien 04
Emerging market = the operator is a monopoly Impact of mobility
Anderson-Coate 05 Welfare analysis Two part tariffs
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Market structureMarket structure
● Agents Telecom operator
Monopoly Two-part tariffs
TV broascasters / Advertisers Consommateurs
● A regulator
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ObjectiveObjective
●Instruments: price
●Two questions
Normative aspects
What are the optimal level of advertising and
broadcasting?
Positive aspects
How to implement them?
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Telecom Operator
Consumers Advertisers
C = Fixed cost (tuner)
c = Variable costs of broadcasting
r = price of one m
inute
of broadcasting
A = Access fee
p = p
rice
of o
ne m
inut
e
of T
V on
mob
ile
T = S
ubsc
ritio
n fe
e
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Normative aspects: Three different Normative aspects: Three different viewsviews
● Regulator Maximizes welfare
● Wise monopoly Maximises profit taking into account the two
sides of the market
● Myopic monopoly Maximises profit on each side separately
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The consumerThe consumer
●n usage of mobile TV en mobilité (minutes)
●m gain per minute from mobility●p purchase price of one minute of mobile TV
●T subscription●a quantity of ads (received)●social cost of advertising U u n I mn pn T a
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The consumerThe consumer
'u n
p n m
●Inverse demand function
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The myopic monopolyThe myopic monopoly
● Choice of the price of advertising / broadcasting
● Choice of the price of the minute of mobile TV
Max sc and ,ara A A a a r n
Max sc andpn T cn C U u n n p
( )r r n
such that u n
p c m
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The wise monopolyThe wise monopoly
● Choice of prices of broadcasting and mobile TV
● Price lower than marginal cost!
Max
sc et
et ,a
pn ra T A cn C
U u n n p
A a a r n
u n u n r nap m m
n r a
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Results on positive aspectsResults on positive aspects
●Analysis Wise monopoly / Myopic monopoly Two dimensions
Externality of advertising Sensitivity of advertising demand to audience
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Results on normative aspectsResults on normative aspects
● The wise monopoly achieves a higher social welfare than the myopic monopoly
● Analysis Regulator / Wise monopoly / Myopic monopoly Two dimensions
Externality of advertising Sensitivity of advertising demand to audience
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Concluding remarksConcluding remarks
● An integrated structure provides higher profits and welfare than a separated structure
Role of telecom operators ● Competition policy
Prices lower than marginal costs