Balancing Revenue Streams in Online Video Platforms: The Impact of Original Content Provision on Business Model Selection

This research investigates the strategic decision related to original content provision and business model selection within the rapidly evolving online video industry. We develop a two-sided market model involving a video platform, users, and advertisers to analyze how the platform balances subscription and advertising revenue while offering original content. This study finds that the amount of original content provided directly influences market equilibrium, affecting the platform’s choice between a purely subscription-based model or a mixed model. The cost of original content production plays a critical role in this decision-making process. High production costs may lead the platform to favor a mixed model, offering less original content to generate both subscription and ad revenue. Lower costs, however, encourage a subscription model with more original content to boost subscribing revenue. Additionally, factors such as network externalities between users and advertisers also impact the business model choice. Importantly, the model shows that allowing free users limited access to original content can expand both subscriber and advertiser engagement, enabling platforms to enhance dual revenue streams without having to sacrifice one for the other.