| dc.description.abstract | In the past, there are few studies examining the competition between a traditional console provider and a cloud console provider in a two-sided market. In our study, we apply a two-sided model to analyze the profitability of a cloud console service. Particularly, because of stable bandwidth demanded by the cloud console service, we involve the role of an Internet Service Provider (ISP) in our model. For the cloud console platform and the ISP, we consider direct selling and delegation models in a Multi-homing setup, in which game developers can either choose exclusive provision or provide their games on the two platforms simultaneously. This consideration helps us elicit useful strategies and implications by simulating their partner relationship.
We have several interesting findings in this research. First, when the performance of virtual machine is enhanced in the direct selling model, it cannot assure a higher profit of the cloud console platform. The virtual machine will help the cloud console platform increase its profit when its performance is higher than a certain level. Next, we discuss the burden of Internet cost related to ISP and the cloud console platform. When gaining more from consumers, the ISP can charge the cloud console platform a lower network fee instead. When the network fee paid by consumers is high enough, the ISP even needs to subsidize the cloud console provider.
Second, we examine the close-knit alliance composed of the cloud console provider and ISP. In the delegation model, when the virtual machine can help save more hardware cost, the cloud console provider will pay game developers a higher license fee for expanding its game library. Meanwhile, the ISP will share more license fee of game developers as well. Then, the commission which the ISP gives to cloud console platform will be determined by their bargaining power. Finally, we further examine the profitability of each participant in the console market when the virtual machine technology is advanced. We find the advance of virtual machine technology can benefit the ISP rather than the cloud console provider, which is contrary to our intuition. More precisely, the profit of the ISP will increase more sharply than that of the cloud console provider; on the other hand, the profit of the traditional console platform will decline. | en_US |