1. STATE OF THE VIDEO MARKETPLACE ONLINE VIDEO DISTRIBUTORS Alejandro Zentner Jindal School of Management UT Dallas CLOSED CAPTION AREA TWO LINES OF TEXT

2. State of the Online Video Marketplace Internet TV means more options: implications for viewing time and enjoyment. Anatomy of the industry. Copyright and compulsory licensing issues: how do revenues affect the supply of new content? Video consumption on the internet vs. traditional consumption: - How does consumption change when individuals move from traditional to online platforms? Do multi-platform consumers watch similar content across platforms? - Consumers may sort into platforms. Are consumers similar across platforms? - Big data: data collection capabilities across platforms. CLOSED CAPTION AREA TWO LINES OF TEXT

3. How Do Additional Choices Affect Viewing Time? It is important to study this question to understand which business models and firms are going to succeed in this new mode of transmission. Internet TV increases the programming variety available to viewers at any given time by: -allowing consumers to choose from a massive online jukebox. -breaking the synchronicity bind that characterizes linear (pre-scheduled) programming. But: there are still only 24 hours in a day. CLOSED CAPTION AREA TWO LINES OF TEXT

4. How Do Additional Choices Affect Viewing Time? Liebowitz and Zentner (2015) attempt to foretell the impact of Internet-induced increased variety on the TV viewing time by examining how the growth in cable television affected TV viewing time in the past. Using country-level panel data going back to the mid-1990s, we find that the increased variety brought about by cable and satellite had virtually no impact on the amount of time devoted to television viewing. However, additional programming choice imply that people will be more likely to find a television show that more closely matches their taste. CLOSED CAPTION AREA TWO LINES OF TEXT

5. Implications for Internet TV Business Models The pre-Internet business model has been a mixture of advertising and subscription. Audience size (viewing time) is the most important factor in generating advertising revenues. Subscription-based demand is strongly related to the value (enjoyment) that viewers place on the programs they watch. Our results indicate that the growth in revenues is more likely to come from subscriptions relative to advertising (subject to several caveats discussed in the paper). CLOSED CAPTION AREA TWO LINES OF TEXT

6. Copyright and Compulsory Licensing Issues: Revenues and the Supply of New Content The economic justification for the existence of copyright is to provide an incentive for the creation of new products. For non-rival products, there is a trade-off between efficiency in consumption (static efficiency) and efficiency in production (dynamic efficiency). It is thus important to determine how revenues affect the supply of new content. Little research yet exists on this topic (Smith and Zentner 2016 reviews the literature). CLOSED CAPTION AREA TWO LINES OF TEXT

7. Video Consumption on the Internet versus Traditional Consumption: When individuals move from traditional to online consumption they may change their consumption choices. - How does consumption change when individuals move from renting videos from physical stores to renting online? Long tail effects (Zentner, Smith, and Kaya 2013). - Social inhibitions and embarrassment (privacy issues). Consumers may sort into platforms (e.g., cable cutters). Regulation might need to consider the different populations (similar to online vs. offline taxation). Piracy proclivity. Data collection capabilities across platforms. The value of data for advertising and for decision making. CLOSED CAPTION AREA TWO LINES OF TEXT

8. STATE OF THE VIDEO MARKETPLACE ONLINE VIDEO DISTRIBUTORS Alejandro Zentner Jindal School of Management UT Dallas CLOSED CAPTION AREA TWO LINES OF TEXT