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Discrete Dynamics in Nature and Society
Volume 2017, Article ID 1349315, 8 pages
https://doi.org/10.1155/2017/1349315
Research Article

Two-Stage Dynamic Pricing and Advertising Strategies for Online Video Services

1School of Management, Tianjin Polytechnic University, Tianjin 300387, China
2College of Management and Economics, Tianjin University, Tianjin 300072, China
3School of Economics & Management, Southwest Jiaotong University, Chengdu 610031, China

Correspondence should be addressed to Zhi Li; nc.ude.upjt@ihzil

Received 4 May 2017; Revised 26 August 2017; Accepted 29 August 2017; Published 18 October 2017

Academic Editor: Cemıl Tunç

Copyright © 2017 Zhi Li and De-qing Tan. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

As the demands for online video services increase intensively, the selection of business models has drawn the great attention of online providers. Among them, pay-per-view mode and advertising mode are two important resource modes, where the reasonable fee charge and suitable volume of ads need to be determined. This paper establishes an analytical framework studying the optimal dynamic pricing and advertising strategies for online providers; it shows how the strategies are influenced by the videos available time and the viewers’ emotional factor. We create the two-stage strategy of revenue models involving a single fee mode and a mixed fee-free mode and find out the optimal fee charge and advertising level of online video services. According to the results, the optimal video price and ads volume dynamically vary over time. The viewer’s aversion level to advertising has direct effects on both the volume of ads and the number of viewers who have selected low-quality content. The optimal volume of ads decreases with the increase of ads-aversion coefficient, while increasing as the quality of videos increases. The results also indicate that, in the long run, a pure fee mode or free mode is the optimal strategy for online providers.