The Optimal Content Provision Strategy for a Streaming Platform: Pure Agency, Self-Production, or Collaboration

With the streaming media industry's rapid growth, platforms like Netflix and Disney+, are transitioning from content distributors to producers. They can operate as distributors (pure agency), create content (self-production), or collaborate with producers (collaboration). We develop an analytical model to examine the optimal content provision strategy for the platform. Our results reveal several insights. First, the optimal strategy depends on creative efficiency and collaboration effectiveness. Second, a greater influence or revenue sharing rate in collaboration does not necessarily result in higher profits for either the platform or the pure content producer. Last, when the creative efficiency of the platform is high, only the collaboration strategy has the potential to achieve a win-win result. However, when the creative efficiency of the platform is low, the pure agency strategy can also achieve a win-win outcome. Our work underscores that streaming platforms should make careful decisions about whether to collaborate with content providers, even if collaboration reduces costs, as this could adversely affect the platforms' profits.