Skip to main content
SpringerLink
Log in

Digital Television and Program Pricing

  • Chapter
The Economics, Technology and Content of Digital TV

Part of the book series: Economics of Science, Technology and Innovation ((ESTI,volume 15))

  • 143 Accesses

Abstract

I explore several ways that the development of digital television technology can improve price discrimination by program producer/distributors—especially by the movie studios. These include development of video-on-demand systems, improved quantity discounting, and of particular interest, improved segmentation of consumers according to their demands for different levels of television transmission quality. I consider HDTV and DVD as examples of quality segmentation opportunities, and conclude that the result will be more revenues for program distributors and thus increased production investments in movies and other programs

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 169.00
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 219.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 219.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Note

  1. See A. Michael Noll. Television Technology:Fundamentals and Future Prospects (Artech House, 1988).

    Google Scholar 

  2. For a discussion of HDTV technology, see M Dupagne and Peter S. Seel, “High Definition Television: A Global Perspective, (Iowa State University Press, 1997)

    Google Scholar 

  3. J. Brinkley, “Cable TV in Digital Push to Get in More Channels, New York Times, November, 1997,. P. C1.

    Google Scholar 

  4. Media Dynamics. TV Dimensions, 1996-97, p. 169.

    Google Scholar 

  5. Paul Kagan Associates, Motion Picture Investor, January, 1996.

    Google Scholar 

  6. D. Waterman. Prerecorded Home Video and the Distribution of Theatrical Feature Films, in E. Noam (ed.)., Video Media Competition (Columbia U. Press, 1985); B. Owen and S. Wildman, Video Economics (Harvard U. Press, 1992).

    Google Scholar 

  7. L. Philips, The Economics of Price Discrimination (Cambridge U. Press, 1983).

    Google Scholar 

  8. Exceptions are the Olympics, which have been offered as PPV and free broadcast exhibitions simultaneously, the former with more specialized commentary and without commercials. A form of price discrimination with televised sports is the presentation by sports bars of large screen PPV events at which patrons purchase drinks or other bar services, while others watch on PPV at home.

    Google Scholar 

  9. Paul Kagan Associates, Pay TV Newsletter, January, 1996.

    Google Scholar 

  10. The economics of quality segmentation is developed in M. Mussa and S. Rosen, “Monopoly and Product Quality,” Journal of Economic Theory, 18, (1978), p. 301–317. An exposition of this article and later contributions is in H. Varian, “Price Discrimination,” in R. Schmalensee and R. Willig, Handbook of Industrial Organization, (North Holland, 1989), Ch. 10. Recent extensions appear in S. Rosen and A Rosenfield, Ticket Pricing, Journal of Law and Economics, XL, No. 2, October, 1997, p. 351-376. The model of this paper employs basic assumptions that are consistent with the established theory.

    Article  Google Scholar 

  11. Technically, the necessary assumption is that the high value viewer not only has a higher absolute demand for the high quality product at all prices, but that the high value viewer has a higher marginal demand for quality as well.

    Google Scholar 

  12. Lack of economies of scale in manufacturing and distribution probably contribute to the higher per unit prices of laserdiscs.

    Google Scholar 

  13. Similar phenomena can be found in other industries. For a collection of instances, including others in recorded music, see R. J. Deneckere and R. P. MacAfee, Damaged Goods, Journal of Economics and Management Strategy, 5(2); 149–174, 1996.

    Article  Google Scholar 

  14. A 1997 Video Store Magazine survey found that the households with kids under 12 owned an average of 66.4 prerecorded videocassettes, compared to 35.4 for households without kids under 12 (June 15-21, 1997, p. 44.)

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Telecommunications, Indiana University, USA

    David Waterman (Associate Professor)

Authors
  1. David Waterman
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Columbia Institute for Tele-Information, Columbia University Graduate School of Business, Columbia

    Darcy Gerbarg

Rights and permissions

Reprints and permissions

Copyright information

© 1999 Springer Science+Business Media New York

About this chapter

Cite this chapter

Waterman, D. (1999). Digital Television and Program Pricing. In: Gerbarg, D. (eds) The Economics, Technology and Content of Digital TV. Economics of Science, Technology and Innovation, vol 15. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-4971-0_11

Download citation

  • DOI: https://doi.org/10.1007/978-1-4615-4971-0_11

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-1-4613-7256-1

  • Online ISBN: 978-1-4615-4971-0

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics

Search

Navigation