Is your netflix a substitute for your telefunken? Evidence on the dynamics of traditional pay TV and OTT in Latin America

Are audiovisual over the top (OTT) services in Latin America substitutes for the traditional Pay TV services (cable or satellite), complementary or independent? To respond to this question, we develop a simple theoretical model based on a CES utility function and estimate simultaneously, using non-linear least squares, demand functions for both audiovisual services. Our results, based on original database covering 17 Latin American countries from 2011 to 2020, suggest no substitution of Pay TV for OTT. However, during the more recent period (2015–2020), we find evidence of gross substitution (i.e., similar enough, although not completely equivalent for consumers) between these audiovisual services. This confirms, although only partially, the existence of the so-called cord-cutting and cord-saving phenomena, due to the expansion of fast internet and the richer OTT offers, and their relatively lower prices. These results suggest regulators should include OTT services in their scope and produce in-depth analysis on the country level to update and optimize regulations, as well as implement regulatory sandboxes to advance towards smart regulation, as shown in the financial industry.     

Is Netflix a threat to the cable TV industry? Evidence from Brazil

In recent years, the Brazilian cable TV industry has experienced a sharp downturn. In parallel, the over-the-top platform Netflix gained popularity and Brazil has become one of its biggest markets. The objective of this paper is to investigate the competitive effects of Netflix's entry on the incumbent cable TV industry. We explore the regional variability of Netflix's popularity (measured by Google Trends) and combined this information with official data of the cable TV market. Using a two-way fixed effects estimator with state-month observations (covering the period of 2012–2019), we showed that the increase in one standard deviation in Netflix popularity is associated with a 3.62% reduction in the density of cable TV subscribers and with a 19.69% reduction in the number of small firms that operate cable TV.     

Demand for sex-oriented cable TV in the USA : Community acceptance and obscenity law

This pooled cross-sectional/time series analysis focuses on individual consumer demand for sex-oriented pay cable programming using data obtained from Coaxial Cable in Columbus, OH. The results suggest that adult movies garnered more demand from pay-per-view subscribers than any other type of programme offered, indicating that sex- oriented cable movies has achieved a reasonable degree of community acceptance. These results are not very encouraging for those who would like to see adult content of this type eliminated from cable television.     

Threat of entry,asymmetric information,and pricing

This paper examines the impact of asymmetric information on incumbent firms' propensity to engage in limit pricing when faced with threat of entry. I draw from information economics to argue that incumbents will use price to respond ex ante to entry in situations characterized by asymmetric information. I suggest two situations in which asymmetric information can arise: when potential entrants are from outside the primary industry and when incumbent firms are members of R&D consortia. I then study pricing in the U.S. cable TV industry to show that pricing patterns of incumbent cable TV systems are consistent with limit pricing when the relationship between the incumbent and potential entrant is characterized by asymmetric information. Copyright © 2012 John Wiley & Sons, Ltd.     

Regulatory options for cable TV in the UK

In this article the alternative methods of regulating the cable TV industry are compared in terms of efficiency and consumer welfare. The effectiveness of each regulatory option in limiting any market power that cable operators may be able to exercise is considered in a framework which recognizes that both the market and government regulations are imperfect, costly and often do not operate in the public interest.     

A theoretical and empirical study on China's transition to digital TV

This paper explores the impact of policies made by the State Administration of Radio, Film, and TV on China's transition to digital TV. The method of stakeholder analysis is used to present a theoretical study on the digital transition, with a quantitative model analyzing the welfare change of three segments of consumers. A simultaneous-equation model is used to study the characteristics of the demand and supply of digital TV in China. It is argued that the policy of uniform transition that ignores coordination among stakeholders does harm to consumers’ benefits, and the healthy and sustainable development of China's cable digital TV industry. In an introductory phase of digital TV, educating consumers with convenient and pleasing experience is essential, and restructuring cable operators in a market-oriented way is also critical for developing countries like China.     

Convergence and regulation of multi-screen television: The Singapore experience

This article addresses complicated convergent and regulatory issues arising from cross-platform audiovisual services and analyzes Singapore's multi-screen television experience. A “platform neutrality” multi-screen TV regulatory scheme is proposed to concentrate on content classification in order to respond to the fast-changing audiovisual industry and competition. Under the scheme, different content and license regulations are applied to four types of TV-like services which are categorized by “socio-cultural impact” (i.e., broadcasting and mass market vs. VOD and niche market)” and “content production/aggregation model” (i.e., gatekeeping vs. participatory mechanism). In addition, competition, content regulation, and digital copyright are identified as key issues involved in the fast-growing cross-platform audiovisual media industry. Finally, this study analyzes market development, regulatory issues, and national plans for multi-screen TV services in Singapore and examines them under the proposed regulatory scheme. Market and policy recommendations are discussed.     

Cable as choice

The major benefit that cable TV has to offer the UK customer is choice. The question is: should choice be limited in any way? Vested interests in the television and film industry are pressing for restrictions on two ‘no go’ areas-live sport and first release films. Gareth Locksley argues that there is no case for restrictions, and that choice will benefit the television and film industries and the consumer.     

Changing dynamics of the overseas marketplace for TV programming: The rise of international co-production

This article examines the recent strategy adopted by the US television production industry in coping with the changing worldwide media environment. Developments in the USA include the commercial networks' declining audience share, the increasing penetration of cable TV, and spiralling production costs; abroad, the coming of age and increased sophistication of the televesion industry and the strengthening of programme import regulations are significant. Access to foreign markets is becoming critical to the financial equation of US producers and distributors of high-budget TV programmes. International co-production is the response to the new dynamics of world-wide television programming and a product of economic necessities.     

A note on the implementation of cable TV rate caps

In devising rate caps under the 1992 Cable Act, the FCC measured the effects of market power in cable TV by comparing overbuild franchise areas (served by more than one cable operator) with monopoly areas. This paper draws attention to, and corrects, several shortcomings in the FCC's analysis. We conclude that the overbuilds' rates are, on average, 12 percent lower than monopoly rates (and not 16 percent as estimated by the FCC, a difference of approximately $700 million in terms of annual cable revenues). Furthermore, overbuild operators offer better service quality than monopoly systems; the average overbuild offers upto 34 percent more non-broadcast channels.     

Cable and satellite TV in the UK and Europe: The emerging legal issues

The impact of satellite and cable TV on existing laws and regulatory frameworks will be considerable. This article reviews the impact on advertising, copyright protection, copyright licensing, programme content, rights of reception and distribution of television signals, and performers rights within the context of the UK, European and international contexts. Many problems exist and are unlikely to be resolved for some time.     

“Open access:” the ideal and the real

“Open access” would allow ISPs to use a cable operator's broadband connection under regulated terms and conditions. Advocates stress the desirability of an “end-to-end” architecture for the Internet and the danger that cable operators will use their control over the last mile to limit consumer choice and stifle innovation. Opponents contend that wholesale price controls and other regulatory burdens under what they term “forced access” would in fact slow down the deployment of broadband, stifle innovation and harm consumers. The fears of “open access” advocates seem largely speculative at this point. Evidence from related policies also favors the opponents. “Closed” cable systems are beating their “open” DSL competitors in the market place; analogous regulation of cable TV did not serve consumers well; and forced “unbundling” of local service has been controversial and largely ineffective. In addition, relevant technology stocks declined in price with political and legal victories for “open access” and increased when it suffered setbacks.     

Disentangling the effects on OTT platform performance of three strategies: Pricing,M&As,and content investments

OTT streaming services have been restructuring the global multimedia industry, and there have been strategic actions and reactions among OTT players and traditional pay-TV platforms. This study found that Pricing and Content investments are key factors affecting market share and subscribership in global OTT markets, and M&As have positive effects on the two performance measures, although with less statistical confidence. OTT-specialized firms in the UK, Germany, France, Japan, and South Korea did not expand subscribers to the same extent as those in the US, but they were able to expand their market share in the UK and Germany while failing to increase it in the other three countries. Local OTT players, especially those in Europe and Asia, might need to be more strategic in coping with US-based firms’ expansion by materializing the positive interaction effects among the three strategies to increase both their subscriber base and market share.     

Evaluating the efficiency change and productivity progress of the top global telecom operators since OTT's prevalence

The telecommunications industry has undergone significant evolvement from fixed to mobile substitution (FMS) to fixed mobile convergence (FMC) and now to over-the-top (OTT) services due to the huge rise in data usage. This paper explores efficiency variation during the period 2012–2017 for the top 41 global telecom operators in Forbes Global, 2000. Based on the data envelopment analysis (DEA) meta-frontier approach to reflect differences in production functions, the empirical results herein show that the number of operators achieving technical efficiency with respect to the meta-frontier fell from 13 firms in 2012 to 10 firms in 2013 to 8 firms in 2014 to 8 firms in 2015 and then to 7 firms in 2016, but then rose to 11 firms in 2017, displaying the impact from rise in OTT. For the mobile-only group, the average technical efficiency with respect to the meta-frontier is 0.841, which is superior to the fixed-mobile group's 0.774 and the fixed-only group's 0.714, and the group difference is significant among the three facilities-based groups. The meta-frontier estimation suggests that the fixed-mobile group has the highest meta-technology ratio (MTR) of 0.901 versus the mobile-only group's 0.886 and fixed-only group's 0.718. The empirical results offer policy implications for regulators to encourage telecom operators to have fixed-mobile operations. We further suggest that telecom operators cooperate with OTT service providers and invest in them in order to take advantage of people's more personalized digital life.     

Technology and policy in cable TV development in the UK

Although cable TV is often viewed in an entertainment context, its importance for technology policy rests with its relation to future national broadband network development. The authors argue that it could provide a means of assessing the benefits and technical direction of this greater project and government support for early cable ventures is advised for this purpose. Government policy should stress incremental technical advance and address the development problems likely to be encountered by cable TV as an infant technology.     

Piracy and box office movie revenues: Evidence from Megaupload

In this paper we evaluate the heterogeneous effects of online copyright enforcement. We ask whether the unexpected shutdown of the popular file hosting platform Megaupload had a differential effect on box office revenues of wide-release vs. niche movies. Identification comes from a comparison of movies that were available on Megaupload to those that were not. We show that only movies that premiere in a relatively large number of theaters benefitted from the shutdown of Megaupload. The average effect, however, is negative. We provide suggestive evidence that this result is driven by information externalities. The idea is that online piracy acts as a mechanism to spread information about product characteristics across consumers with different valuations for the product. Our results question the effectiveness of blanket public anti-piracy policy, not only from a consumer perspective, but also from a producer perspective.     

Circulation of loyalty: Relationships between mobile instant messenger and offline character emoticon store

Mobile instant messenger (mIM) service providers are extending their online services to the offline platform. Asia's largest mIM service providers, LINE and Kakao, are brining life to its signature characters such that they appear not only on the text screen but also on offline character flagship stores. This study investigates mIM users' motives in visiting the store and identifies the role of mIM characters in facilitating users' loyalty toward the mIM service provider. To comprehensively understand users' motivations in visiting the offline flagship store, the study conducted a focus group interview and used the confirmatory factor analysis (CFA) to identify seven key motivations. The empirical findings are drawn from 332 Korean respondents that use the mIM service and have experience in visiting the character flagship store. The study finds that users who actively use mIM services and emoticons are likely to visit the store due to the identified factors. A virtuous cycle of loyalty from online to the offline platform, and vice versa was also found. Findings of this study confirm that mIM character flagship stores are a strategic way for mIM service providers to communicate with users and create their unique brand identity.     

Walloon & Flemish videotex trials

This article focuses on the problems surrounding ‘compunication’, ie the growing imbrication between electronic computers and telecommunications. (The corresponding French term is télématique). More precisely, the specific problems of videotex systems thrown up by different experiments in Belgium are examined. The CCITT of the ITU uses the term videotex as the generic name referring to all systems that make it possible to gain information through telecommunication networks (Hertzian waves, cable TV distribution networks or telephone lines). Requested information appears on a TV screen (at home, in a place of work or in a public place).     

Are OTT messaging and mobile telecommunication an interrelated market? An empirical analysis

OTT messengers such as Facebook and WhatsApp have gained wide popularity among mobile users while the traffic of text messaging is in strong decline. As such, there is a debate over whether both services are interrelated and constitute a joint product market, which has important implications for the current wave of mergers in the mobile industry and regulation policy. To the best of our knowledge, this work is the first to provide an empirical analysis of how the consumption of OTT messengers affects demand for text messaging and mobile voice services. We make use of an innovative dataset which includes very detailed information on smartphone usage in Norway and consider a novel approach to address this question which is embedded in the complexity of two-sided markets. Interestingly, our findings suggest that OTT messengers complement demand for traditional mobile telecommunication services for this context. Consequently, both markets are interrelated but do not constitute a joint market from the perspective of competition policy in Norway. Moreover, we find an explanation for why reductions of text messaging usage have been so drastic in some countries and an analogous development for mobile voice is rather unlikely. Finally, our empirical results provide a new perspective on the modelling of consumer utility in communication networks in the theoretical literature.     

Will choice be extended by cable?

An article by Gareth Locksley in the June 1983 issue of Telecommunications Policy argued that a major benefit of cable TV for the UK viewer would be increased choice. In this response, Richard Collins questions wheather real choice will be extended by cable and examines the syllogism put forward by Locksley: cable = competition = efficiency = progress.