Demand Substitutability and Channel Performance Analysis of Pay TV Program Genres

Abstract:     
Although the SSNIP (Small but Significant and Non-transitory Increase in Price) test is a commonly used methodology for market definition, it can hardly be applied to the market definition of pay TV program genres. In this paper, a social network analysis has been applied to the market definition of pay TV movie genre. By analyzing the channel selection behavior of users, we examined the existence of substitute in the pay TV movie genre.

In addition, this paper also investigated the potential to deteriorate the quality in the programs after the merger between the movie channels throughout the profit and loss statements analyses of each movie channel. Regression analysis on the viewer ratings and advertising revenue showed that the higher the viewer ratings are, the larger the advertising revenue is, and consequently it is very probable that even a small decrease in the viewer ratings results in huge amount of drops in the advertising revenue. Therefore, the merger corporate is not willing to reduce the program qualities on purpose. We have concluded that merger and acquisition of movie program channels could be an advisable alternative for restructuring the movie contents market.

Keywords: Market definition, Social network analysis, Demand substitutability, SSNIP, TV Program genres

Accepted Paper Series