Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Series Vol. 35 , 10 November 2023
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With the rise of internet technology and the popularity of mobile devices, the video industry has become an increasingly important part of the global entertainment landscape. This paper discusses the pricing strategy of Tencent in the video streaming industry. The paper states that Tencent has used the Bertrand Model to set prices equal to marginal costs to attract customers and expand its market share. However, in the case of Tencent Video’s subscription price hike, the Cournot Model may be more applicable as the firm assumes that customers will continue to subscribe during the pandemic period. Despite the subscription price increase, the change in the price would be larger than the change in demand, leading to higher profits. The article also discusses the increase in demand for Tencent Video memberships and the factors contributing to it. From a game theory perspective, Tencent and its members can be modeled as playing a classic prisoner’s dilemma game. Finally, the article discusses the opportunity cost for consumers and the concerns regarding the fairness of the increase in membership fees. This paper also utilizes the SWOT analysis.
video streaming industry, pricing strategy, economic models
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The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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