The Essays on the Economic Analyses of New IT Online Contents Business:Game, Music and Smartphone

Abstract

The study on consumers actual value for online service consumptions offers new business insights as online contents business and technology are dramatically converging. Ubiquitous Internet penetration is leading to networked gaming and greater online participation. The values driven from engagement in online communities underpin value based pricing. Trans-information mechanism that enables the right choice captures consumers attention. The slot-design mechanism reflects the value of the attention. The digital contents business promises increasing productivity as smartphone becomes more powerful. Lately, smartphone acts as a key channel to deliver online content services. The consumers value based pricing and the information delivery mechanism to rivet their attention have been prevalent and rapidly studied in an emerging technology. The research interest is to identify the value creation of online content consumptions and its new delivery channel. This thesis examines the values tide up with online gaming participants, the ranking mechanism reflecting customers attentions, and impact of smartphone on online content services. In the first essay, the study reports on the valuation of the time that a user participates in an online community. To estimate the value, I conducted econometric analysis for a large data set from a massive multi-player online role-playing game from Korea. I specified the model based on knowledge of the game players and the activities in which they engage in a field study. The results permit us to estimate hedonic value in monetary terms per minute of participant game play. I discuss how to use this type of information to create incentives through participation fees and subsidies to maximize consumer value, while creating additional network benefits for others. I also extend the empirical work through the development of an analytical model with related numerical simulation to show how a gaming service provider can support differential pricing, including the possibility of early participation subsidized pricing, over a participant's life time of activities in the game. I further discuss the applications of the approach that I present, and why and how it can be used to evaluate other types of mechanisms that involve hedonic and utilitarian value. In the second essay, I analyze the music charts of an online digital music distributor that displays real time and weekly rankings on its website, and study how ranking policy should be set to maximize the value of its online music ranking service. The existing mechanisms considers only streaming and download volumes, while the new ranking mechanism reflects more accurate preferences for popularity, pricing policy, and the slot effect based on the exponential decay of attention. The new ranking model is designed to verify correlations with two kinds of service volumes for popularity, pricing policy, and the slot effect. Slot mechanism design is analyzed in a heuristic way. My analysis shows that music content sellers maximize benefits by assigning their own music items to the highest-ranking slot, which provides visibility. Also sellers can strategically design the slot size to influence the popularity of music items. Music content buyers gain indirect benefits by getting segmented ranking slots and reducing search costs. Empirical analysis illustrates the features of the online music industry and validates hypotheses constructed around the new ranking model. The results show that the new ranking mechanism is more effective. In the last essay, emerging technologies have created disruptions in organizational, business process and industry contexts. They act as shocks to a system. I focus on a retail telecom service providers offerings of different bundles, including mobile phones, Internet and cable TV services. I conduct empirical regularities analysis for one country in Asia, which was affected by the emergence of smartphones in 2009. I assess the impacts on the service bundle choices of a providers customers. I analyze customer switching among service bundles involving three services. I compute switching probabilities for each of the service levels offered, as well as between bundles. I use Markov chain transition analysis to describe the patterns. I find evidence for: smartphone effects on the contents of service demand

substitution between different kinds of Internet services

and migration of video consumption from cable TV to mobile services. In addition, I compute the instantaneous transition rate from feature phone services to smartphone services on a monthly basis. In our estimation, I identify the marginal effects of price and remaining contract on the transition rate. The results provide a basis for improved management of retail services bundling and pricing strategies.