›› 2020, Vol. 32 ›› Issue (1): 211-218.

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Study of Continuous-time Model for Online Video Business Mode Selecting

Li Zhi1,2, Tan Deqing3   

  1. 1. School of Economics and Management, Tiangong University, Tianjin 300387;
    2. College of Management and Economics, Tianjin University, Tianjin 300072;
    3. School of Economics & Management, Southwest Jiaotong University, Chengdu 610031
  • Received:2017-04-10 Online:2020-01-28 Published:2020-01-19

Abstract:

As the demands for online video service increase intensively, the issue of how to select business modes and how to switch be-tween them has drawn great attention of web video suppliers. This paper focuses on fee mode and free mode, and creates continuous-time revenue model of web video business with considering viewers' emotion, and uncertainty of selection. By applying the Hamilton maxi-mum principle, the optimal charging and advertising levels are constructed and the optimal switching time point is determined. According to the model, the optimal charging price and the amount of advertise are influenced by strategy time and consumer experience utility. Meanwhile, viewer's aversion level to advertising has a direct influence on the amount of advertise. Finally, assuming video is played in infinite continuous time, the model proves that the optimal profiting strategy is either fee mode or free mode, which means the unique mode will be most profitable.

Key words: continuous-time model, online videos, fee mode, free mode