Strategies and Implications of Entertainment Media Consumption

Entertainment consumption has changed drastically in the last decade, presenting new problems and questions to the entertainment industry. My research addresses three different problems in this industry. First, we study how to rank products optimally in a trial-offer marketplace where

consumers present heterogeneous preferences and are influenced by past purchases. Second, we study the strategic implications of binge consumption of entertainment for advertising video on demand platforms. And third, we study the optimal release timing of movies between theatrical and home video (DVD and Blu-ray) markets, as the quality of the latter approaches the quality of

the former In the first chapter, we study optimal ranking policies in a stylized trial-offer marketplace model,

in which a single firm offers multiple products and has consumers who express heterogeneous preferences. The platform owner needs to devise a ranking policy to display the products to maximize the number of purchases in the long run, and to decide whether to display the number

of past purchases. We find that when past purchases are displayed, consumer heterogeneity makes buyers try sub-optimal products, reducing the overall sales rate. We then show that consumer heterogeneity makes the ranking problem NP-hard (under Turing reductions) and we analyze the benefits of market segmentation. We find tight bounds to the expected benefits of offering a distinct ranking to each consumer class and we show that the market segmentation strategy always benefits from social influence. The firm is better off using an aggregate ranking policy when the variety of consumer preference is limited, but it should perform a market segmentation policy when consumers are very heterogeneous. This result is robust to relatively small consumer classification mistakes; when these are large, an aggregate ranking is preferred.