Research Of Platform Strategy In Content Differentiation Based On Tow-Sided Markets Theory

With the popularity of the Internet and mobile Internet in our daily life, enjoying online video has become the most important way of entertainment: monthly online video viewers more than 500 million, the time-proportion of online video more than 30% of the total time spending on Internet. However, most of the video platforms need to deal with serious finance loss in such a super market. What's more, there is no complete and systematic research in online video service area, and platform operators could not find the corresponding theoretical support when they meet problems in company operation. The theoretical research in online video area is lagging behind the industry practice. Based on two sided markets theory, this research try to test the view of "content is everything", analyze the impact of content differentiation on the platform operation by theoretical model, which may help platform when the in need. This paper will have important significance in both theoretical and practical area.This paper has certain innovation in research object and content:First, the research object of this paper is the online video service platform. The online video platforms were born out of the traditional TV platforms and has developed more than 10 years. With the development of the Internet, online video users could choose the when and where to watch the video and could have real-time interaction with other users. Online video service is similar to the traditional media service platform, also they have their unique features. Besides, the impact from the video user structure and product structure is involved in this paper, such as the difference when one is single-home or multi-home.The paper is about what the platform operators will do when they are in front of the impact from vertical product differentiation. When focus on online video platforms, the product differentiation means different video amount and different cross network externality of different videos.Compared with the product of traditional industry, online video means: 1)low storage cost, huge amount, and obviously long tail effect; 2) attraction from hot videos, is the most important reason why the users choose the online video platform; 3) low marginal cost and obvious network effect.The main contributions of this paper are as follows:In the case that the audience, the content producers and the advertisers are all single-homing, 1) the amount of advertisement and the ads price set by the platform is proportional to the amount of unique content, when the amount of unique video is increased, audience increased accordingly; 2)When the unique content has high cross network externalities, it will also bring more visitors, ads and increase the ads pricing, essentially, it will increase the profits of the platform.In the case that the viewers, content producers, and advertiser are all multi-homing and only advertising revenues are accounted to platform profits, 1) With the increase of the number of unique content, the number of visitors increased, but the number of single-homing users reduced, the number of ads increased, the number of single-homing advertiser increased,and the ads pricing increased, eventually, the interests of the platform increased; 2) to the audience, when the cross network externality increased,that means per unique video attract more audience than before, the audience number increase, but the advertisement quantity and pricing remain stable and Profit unchanged; to ads, when the unique content externality increases, the number of ads and ads price charged by platform increase, finally, the platform profits increased.In the case that the viewer, content, and advertiser are all multi-homing, and platform charges advertising fees and membership fees,member audience is superior to non-members on platform whatever video number or services. There is a negative effect of the exclusive contents to ads pricing, ads quantity and single-homing audience, to achieve the maximum platform profit, operators need to balance the interest of pay and free members.