Research on Coopetition Strategy in IPTV Between SARFT and Telecom Operators in

Abstract

In order to promote rapid development of IPTV， we need to coordinate the coopetition relationship between SARFT and telecom operators. Considering the substitution effect of IPTV to traditional TV， the paper builds a coopetition model and explores their choices of coopetition strategy and optimal yield decisions under the different level of profit-sharing based on Stackelberg game.The results show that：SARFT should provide IPTV with most program resources.The optimal coopetition strategies are different if the profit-sharing that SARFT gets is at different stages. The profit-sharing between SARFT and telecom operators should be controlled in the neighborhood of seven-three to choose the mutual cooperation strategy， getting the highest profit than others under the optimal coopetition stategies that they select when the profit-sharing is at other stages.

Key words： SARFT； Telecom Operators； IPTV； Coopetition

INTRODUCTION

IPTV combines the advantages of radio and television media and network， and provide customers with high quality services as online consulting， online shopping etc. In China， the State Administration of Radio， Film， and Television （SARFT） holds the licese and is in charge of the integrated broadcast rights of IPTV， the telecom operators（TC） occupies the broadcast channel with the resources of Internent broadband exports and Internet Date Center（IDC）， it can promote rapid development of IPTV if they cooperate with each other. However， they are independent and array with each other at present， the coopetition relationship between them is always difficult to reconcile， resulting in the slow development of IPTV in China （Deng， 2011）.

Scholars conducted some researchs on the coopetition relationship between them. Focusing on the acces to policy， QIN Zi-xing et al （2008） built a competive model and applied the modified Stackelberg game in analyzing the optimal yield under the lax and strict control policy， drawing the conclusions that lax control policy was favorable for IPTV expanding in the phase of promotion. Hu-Lei et al （2011） took the mobile TV as example after getting consumer’optimal consumption flow based on the utility fuction and built a cooperative modle to analyze their optimal price strategy based on Stackelberg game where SARFT was the leader.

However， these studies had only focused on the competition or cooperation and not involved in the situation where both competiton and cooperation existed. Base on the policy of Triple-play in China， the TC who meets the requirement can engage in the production of radio and television programs in additon to current political affairs. Namely， TC can invest into making content and provide to the integrated broadcast platform of iptv to compete with SARFT while he is cooperating with SARFT to develop IPTV， but the audit and broadcast of content are still controlled by SARFT. The SARFT can develop IPTV through Two-way network reconstruction while he is cooperating with TC. Yu Tongshenet al（2011） considered the policy and analyzed their choices of propeling strategy. But they only brifely discussed their strategy in theory based on pigs’payoffs and didn’t have the deeply quantitative analysis on the coopetition relationship. So， the article builds a coopetition model where both competiton and cooperation exist and discusses their choices of coopetition strategy and optimal yield decision under the different level of profitsharing based on Stackelberg games， hoping to enrich the theoretical research and pomote the healthy and rapid development of IPTV in China.

1. THEORETICAL BASIS AND THE DESCRIPTION OR ASSUMPTIONS OF THE MODEL

1.1 Introduction to the Theory of Coopetition

In actual operations， competition and cooperation among enterprises usually occur at the same time， the profit comes from not only the competition， but also the cooperation. Hamel et al （1989） firstly concerned that the enertprises could carry out both competition and cooperation among them during the management. Brandenburger et al （1996） defined it as “coopetition” firstly and applied game theory in describing the phenomenon that both competiton and cooperation exist. However， Bengtsson et al （2000） indicated that the coopetition was a behavior that the competing companies in the industry cooperated in the activities away from the customers and competed in the activities close from the customers.

For the coopetition types， it is mainly classified according to the characteristics of competition. Wilkinson et al （1994） took the relationship between the supply chain upstream and downstream as pointcut and divided it into four kinds： coopetition pattern under high cooperation and high competition， partner pattern under high cooperation and low competition，conflict pattern under low cooperation and high competition， dependent pattern under low cooperation and low competition. Luo et al （2005） took the horizontal relationship as pointcut and divided the coopetition relationship among the multinational corporation and its major competitors into four kinds： cooperative pattern under high cooperation and high competition， partner pattern under high cooperation and low competition， battle pattern under low cooperation and high competition， isolated pattern under low cooperation and low competition.

1.2 Description of the Model

In China， sarft holds the licese and is in charge of the integrated broadcast rights of IPTV， TC occupies the broadcast channel with the resources of Internent broadband exports and IDC， they can mutually cooperate to develop IPTV. Meanwhile， SARFT can develop IPTV itself through Two-way network reconstruction， and TC can invest into making content and provide to the integrated broadcast platform of IPTV to compete with SARFT. So， the coopetition between them can be sloved rely on the coopetition theory. As shown in Figure 1， SARFT cooperates with TC through the profit-sharing， SARFT is responsible for providing content and gets β of the income， TC is responsible for conveying and gets （1-β） of the income， we suppose the yield is q1.SARFT also can process the Two-way network reconstruction at the unit cost c3， we suppose the yield is q3. TC also can make content at the unit cost c2， we suppose the yield is q2.

（4）SARFT has the advantage in contenrt and doesn’t need fees in content to launch IPTV. TC has the advantage in channel and doesn’t need fees in coverying.

（5）The article focuses on the coopetition relationship. We don’t consider the impact of the integrated broadcast rights on the content which TC provides in order to facilitate the analysis. In other words， we assume the content which TC provides to the integrated broadcast platform of IPTV passes the audit and is allowed to play.

When β≤k/a， the conditions for existence of Lowly Competitive Patter and Lowly Cooperative Pattern and Highly Cooperative Pattern don’t set up， they can only choose competition. Such as in Table 2， there only has the profits of Highly Competitive Patter whenβ≤0.01.

When k/a

The article embarks from the plight of IPTV development in China and builds a coopetition model between SARFT and TC based on the profit-sharing and explores their choices of coopetition strategy and optimal yield decisions under the different level of profit-sharing based on Stackelberg games. The conclusion is as follows：

The SARFT should provide IPTV with most program resources. Both SARFT and TC should choose competition if the profit-sharing between SARFT and TC is under the neighborhood of seven-three. Both of them should choose cooperation if the profit-sharing is in the neighborhood of seven-three. Their optimal coopetition strategy is （cooperation， competition） if the profit-sharing is above the neighborhood of seven-three. Meanwhile， their profits are the highest if both of them choose cooperation than others under the optimal coopetition stategies that they select when the profit-sharing is at other stages， they shoule controll the profit-sharing into the neighborhood of seven-three to choose the mutual cooperation strategy.

In Highly Cooperative Patter， SARFT is responsible for providing contene and TC is responsible for converying. For SARFT， his biggest advantage is content compared with TC. He should keep this advantage and fouse on improving the quality of program and developing new programs. He should adhere to the principle that content and service are supreme to improve the quality of program and increase the types of interactive program finally developing to the value-added service. For TC， he occupies the broadcast channel with the resources of the Internet broadband exports and Internet Date Center. He should speed up the construction of broadband network with the attitude of runner improving the carrying capacity of broanband and network speed to ensure the stability of network.

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