Analysis Of The Impact Of Consolidation On Platform Quality In Online Video Platform Industry

With the development of Internet technology and the popularity of smart phones,media platform is playing an increasingly important role in people’s daily life,which has led to the rapid development of the media platform industry.A lot of capital went into the industry,prompted the consolidation between media platforms.The merger is becoming more and more common(such as Youku and Tudou video merged,Disney and Twenty-First Century Fox merged,etc).How does this kind of merger affect the quality of media platforms(which can be understood as the quantity of programs,the quality of videos,the adequacy of personalized services),and then how does it affect consumer surplus,advertisers’ profits,and social welfare?What are the characteristics of the government’s regulatory strategy?These are the main issues discussed in this article.The media market is a typical bilateral market,where platforms attract consumers and advertisers by offering a variety of programs.Because consumers generally hate advertisements,the advertiser brings negative externalities to the audience group,and the advertiser group wants their advertisements to be seen by more consumers,so the audience group brings positive externalities to the advertiser group.It is this kind of asymmetry of externalities that gives platforms the incentive to improve product quality in order to attract more consumers and thus more advertisers.In practice,the platform can improve product quality mainly in the following aspects:(1)provide more programs;(2)provide background support technology for smooth playback;(3)provide personalized recommendation service for the audience.By constructing a bilateral market model,this paper analyzes the impact of platform merger on program quality,consumers’ viewing time,advertising price,advertising volume,advertisers’ profit,consumer surplus and social welfare.We first analyzed the two-platform scenario and then expanded to the multi-platform scenario(specifically,we took three platforms as examples).This paper mainly draws the following conclusions:1.When there are only two platforms in the market,the platform merger will reduce the level of R&D investment,that is,the quality of the platform will be lower than before the merger2.When there are only two platforms in the market,after the merger,the time for consumers to watch programs will reduce,the surplus of consumers will reduce,but the profits of the platforms will increase.3.When there are only two platforms in the market,the advertising price charged by the platform will reduce after the platform is merged,but the change of the total number of advertisements on the platform and the profit of advertisers is uncertain,which may increase or decrease.4.When there are only two platforms in the market,if the government regulates the amount of advertising on the media platforms,the amount of advertising on the platforms without supervision before the merger will be higher than that when supervision is imposed;However,after platform merger,the amount of advertising on the platform without supervision is lower than the amount of advertising on the platform with supervision.5.When there are three platforms in the market and two of them are merged,the merger will lead to the decrease of the quality of the platforms participating in the merger and the increase of the quality of the platforms not participating in the merger.And the overall quality level in the industry will decrease.