Manufacturer's Channel Strategy in Live Streaming Commerce: Two Business Models

ABSTRACT Live commerce allows manufacturers to sell products directly to a broad online audience while engaging multichannel networks (MCNs) in promotions. This study investigates two strategic models for manufacturers: vertically integrating an MCN or collaborating with one. Considering the herd effect and the risk of consumer–product mismatch in livestream shopping, we formulate a Stackelberg game model that includes a manufacturer, a retailer, and an MCN. The results show that the effect of the return rate and commission rate on the manufacturer's profit is nonmonotonic. Under the integration model, livestream selling favors the manufacturer when the associated costs are low. In the collaboration model, the manufacturer is incentivized to introduce a less efficient livestream channel. This strategy serves a dual purpose: it constrains the revenue captured by the MCN and leverages inter‐channel competition to strengthen the manufacturer's control over the retail channel. Our analysis establishes that the two livestreaming models have distinct applicability conditions. A key finding is that the manufacturer may lack the incentive to integrate the MCN, even when it incurs no cost. This analysis provides valuable insights for manufacturers devising their entry strategy into the livestreaming e‐commerce sector.