Research on video platform competition considering quality difference and network externality

Abstract

Based on the network externalities, this paper constructs a Hotelling model to study the quality competition between pay video platform and free video platform. Result finds that, only when the intensity of self-network externality is high as well as consumers are less bored with advertising, or when the intensity of self-network externality is low and consumers are extremely tired of advertising, the program quality and profit of pay video platform will be higher than the free one. Otherwise, the program quality and profit of the free video platform will be higher.