Studying On Programming Differentiation Strategies Of Television Channels

Given a certain time slot, it is easy to converge for programming types a number of television channels broadcast simultaneously, which reflects the smaller programming horizontal differentiation between these channels. Programming differentiation strategies are important for pay and advertiser-supported television channels. In order to gain the maximum profit, each channel should consider the programming differentiations about programming types and qualities when broadcasting programs. In fact, the programming differentiation is on the basis of the product differentiation, so the analysis of programming differentiation should be in the theoretical framework of product differentiation. Like the ordinary product differentiation, the programming differentiation has two dimensions: horizontal differentiation and vertical differentiation, which mean differentiations of programming types and qualities respectively. This paper constructs spatial models to analyze the horizontal and vertical differentiation of programming, and tests the horizontal programming differentiation empirically using the viewing data of Beijing market.In this paper, I review the relevant literatures on programming differentiation among channels. Due to television industry is a two-sided market, advertising effect should be added when programming differentiation strategies of television channels be analyzed. First, I review the theory of two-sided market, and specify the product differentiation theory, which is the base of programming differentiation. Then, I review the theoretical and empirical literatures on programming differentiation among channels. According to the forms of the economic models, there have been three stages as to programming differentiation theory: discrete model stage, continuous model stage, and modern model stage. During recent years, while the spatial competition model has been employed in most theoretical literatures on programming differentiation, more empirical analysis are devoted to testing the conclusion of the model. I analyze the decisive factors of horizontal and vertical differentiation between channels in the framework of spatial competition model in the theoretical part of this paper. As a result of advertising involved, the programming differentiation strategies of the advertising-supported channel are more complicated than that of the pay channel. I find when I assume that the utility of audience is a linear or quadratic function of programming types'distance, at the equilibrium, the degree of horizontal programming differentiation between pay television channels is maximum or minimum respectively. However, the degree of horizontal programming differentiation of advertiser-supported channels at the equilibrium depends on extent to avoid advertising of audiences. And whether for pay channels or advertiser-supported channels, the degree of vertical programming differentiation relies on audiences'preference to advertising.I present an empirical study of spatial competition model to estimate audiences'preference to program types using data of advertiser-supported television market in Beijing. My study shows that programs audiences watching concentrate on a few types, so duplication of program types is very common, and the degree of horizontal programming differentiation is lower.