Content valuation strategies for digital subscription platforms
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Content valuation strategies for digital subscription platforms Special Issue of the Journal of Cultural Economics: The 2018 Mallen Conference Raoul Kübler1 · Rouven Seifert2 · Michael Kandziora2 Received: 30 January 2019 / Accepted: 31 August 2020 © The Author(s) 2020
Abstract For digital video subscription platforms, creating and managing content portfolios are critical to acquire new customers, retain existing customers, leverage cross-sales, and generate advertising revenues. We treat content portfolios as a form of pure bundling which may vary in composition and attractiveness over time. Therefore, evaluating the value contribution of each content piece is essential to manage a platform’s portfolio efficiently and to understand how a specific content piece contributes to the bundle’s attractiveness. In this article, we develop an ROI content valuation framework for a digital film subscription platform. This framework describes how a single piece of content diffuses through consumers’ journeys and influences subscription fees through acquisition and retention as well as revenues from cross-sales and advertising. This conceptual approach allows us to address the heterogeneity across content and platform contingencies such as exclusive availability and platform specifics, and link them to revenue streams. Building on this framework, we offer avenues for future research and provide potential lead performance indicators together with their operationalization, enabling all parties involved in the production, marketing, distribution, and sales of content to determine the platform-specific value of a content piece. Keywords Video on demand · Business models · Content strategy · Portfolio valuation JEL Classification L82 · M21 · M30 · M31
* Raoul Kübler raoul.kuebler@uni‑muenster.de Extended author information available on the last page of the article
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Journal of Cultural Economics
1 Introduction Digitization has fundamentally disrupted how audiovisual content is produced, distributed, and consumed. This technological development has culminated in a vast array of digital video subscription platforms (DSPs) such as Netflix, Amazon Prime, and Hulu absorbing a majority stake in movie consumption (Deloitte 2018; PwC 2019). In 2018, Netflix (2019) alone generated $15.79 billion in worldwide revenues, with the USA and Canada contributing $8.28 billion. In the USA alone, 55% of homes spent more than $2 billion a month on streaming entertainment for the more than 200 video-on-demand services available (Wang 2018). We take as our focus DSPs in which consumers pay a specific fee to access a pool of audiovisual content. This DSP market has witnessed substantial growth in the last decade, with its major players—Netflix and Amazon Prime—not only dominating the online video-on-demand landscape (Statista 2019) but also affecting other parts of audiovisual entertainment. According to Hennig-Thurau et al. (2019), German consumers spend more time with Netflix than with any single TV station, and even Holl
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