A Game Theory Model of Online Content Competition

Abstract

This paper develops a game theory model consisting of online content providers and viewers, where providers compete for the diffusion of their contents on a user-generated content platform. Each provider seeks to maximize the profit by determining the optimal views and quality levels of their digital products. The viewers reflect their preferences through the feedback functions, which depend on the amount of views and on the average quality level. The governing equilibrium conditions of this model are formulated as a variational inequality problem. Moreover, we analyze the Lagrange multipliers and discuss their role in the behavior of providers. Finally, our results are applied to an example of content competition on YouTube.