| Abstract: |
The emergence of smart TV device encourages the reconsideration of the
customer's subscription on the pay TV so that the phenomenon of cord-cutting
evokes the other dimension of MVPD (Multi-Channel Video Programming
Distribution) industry itself. Two major paths to adopt the new platform in
MVPD market cover the switching cost and effect for the new platform such as
smart TV and restrain the discount price by bundling triple-play which is one
provision over a single broadband connection of two bandwidth-intensive
services such as high-speed Internet access and television, and the
latency-sensitive telephone. The research question over this simultaneous
equation model exhibits that rate of customer subscription affects with more
attention from demand-pull phenomenon by the high switching cost versus
bundling price for multiple play service in behavioral economics way.
Behavioral economics can explain the way of consumer's choice by providing it
with more realistic psychological foundations. The hypothesis investigates the
incentive mechanism has positive effect from the discount rate by tying the
product bundling within MVPD service provision. Shapiro and Varian (1998)
examine some of the business strategy implications of switching costs at a lay
reader level. The switching cost results in the lock-in effect and takes scale
economies of demand side. Farrell and Shapiro (1989) mention that once they
are locked in, they can be a substantial source of profit whether it is
substation or not. Also customer left the current service due to that cost.
The prerequisite for switching cost investigate the product complexity
(Gatignon and Robertson, 1992; Klemperer, 1995), heterogeneity of supplier in
market (Schmalensee, 1982), the product diversity from the supplier side
(Blattberg and Deighton, 1996; Klemperer, 1995; Ram and Jung, 1990), the level
of modification in consideration of customer demand (Bhardawaj et al., 1993),
the experience of alternatives (Bhattachary et al., 1995), the experience of
switching choice (Bhattacharya et al.,1995; Nilssen, 1992), and time
limitation of selection pressure or individual characteristic of risk aversion
could be the factor to reorganization of switching cost by customer. Previous
literature tries to explore the path and find out the factors which effect on
the customer's switching behavior. |