Competition through Exclusivity in Digital Content Distribution

Abstract

Following decades‐long subscriber growth, cable TV is experiencing a perceptible decline in viewership as a result of escalating fees, outdated content search, and rigid program scheduling. With cord‐cutting consumers seeking alternative viewing experiences, online streaming providers are gaining “eyeball shares,” strengthening their bargaining positions in subsequent licensing negotiations. We capture the market dynamics between content owners, cable networks, and streaming providers by analyzing a prevalent practice—windowing—that aims to create temporal exclusivities across distribution channels. We derive conditions under which windowing would affect the split of subscription and advertising revenues between competing distribution channels; we also show how content values would change the choice of redistributor and the length of windowing delay between cable and streaming runs. Results here suggest how content owners can best benefit from the streaming provider's on‐demand content access and the cable network's more diversified revenue streams.