User-Generated Content (Ugc) Adoption Decision for Competitive Two-Sided Streaming Media Platforms

Abstract

Two-sided media streaming platforms nowadays pay rising attention to user-generated content (UGC). The platform can attract customers through UGC without paying huge copyright costs. However, the creator of UGC is becoming the competitor of the platform in the advertising market as UGC can be an alternative advertising channel. This paper develops a game theory model to study the effect of UGC adoption on two-sided platforms. We show that the adoption of UGC will not only cause the inner-platform ad competition but also change the original inter-platform competition in the market. At this time, only the platform that owns the UGC content value advantage can win the competition. This paper also defines some conditions for the platform to adopt the UGC under different scenarios. What’s more although the UGC content value advantage is proved a key to win the competition, too much UGC content value advantage is not expected by platforms that plan to adopt the UGC. This is because an extremely large UGC content value advantage will lead to vicious competition and decrease the potential benefit of adopting UGC.

Keywords: Two-sided platform, Digital platform, Streaming media platform, User-generate content, Platform competition