Allocating revenues in a Smart TV ecosystem

• Author: Francisco Lopez‐Navarrete,Joaquin Sanchez‐Soriano,Oscar M. Bonastre
• Published date: 01 September 2019
• DOI: http://doi.org/10.1111/itor.12636
• Date: 01 September 2019

Intl. Trans. in Op. Res. 26 (2019) 1611–1632

DOI: 10.1111/itor.12636

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Allocating revenues in a Smart TV ecosystem

Francisco Lopez-Navarrete, Joaquin Sanchez-Soriano and Oscar M. Bonastre

U.I. Center of Operations Research (CIO), Miguel Hernandez University of Elche,Avda. de la Universidad s/n,

03202-Elche, Alicante, Spain

E-mail: f.lopez.navarrete@gmail.com [Lopez-Navarrete];joaquin@umh.es [Sanchez-Soriano];

oscar.martinez@umh.es[Bonastre]

Received 16 August2018; received in revised form 15 January 2019; accepted 15 January2019

Abstract

This paper deals with the problem of allocating the revenues generated by subscription fees, advertising,

and pay-per-view in a Smart TV (STV) ecosystem between the provider of the Internet TV service and the

content producers. The goal is to obtain a suitable mechanism for the allocation of the revenues such that

all stakeholders agree with it. For this purpose, we define cooperative STV games that reflect the revenue

generated by the STV system. We characterize the core of these games and obtain simple formulas for their

Shapley and Tijs values, which we prove belonging to the core.

Keywords:revenue allocation; Smart TV; game theory; Shapley value

1. Introduction

The emergence of the Internet along with the spectacular development of technologies related to

wireless communications and the integrationof both as parts of a unified concept of communication

have changed many things in our lives. How we relate to each other with the spectacular bloom

of social networks, how we consume goods and services that have brought about change in many

markets with the transformation of business models orienting them toward online access, or how

advertisers present and deliver advertising with the ability to customize it, are some examples of

these changes. One market that has changed, or is greatly changing, is the market for multimedia

content in the different formats of music,text, or video. The new consumption habits of this content

make it necessary to explore other mechanisms or market designs in order to offer them to the

consumer in such a way that it remains profitable for multimedia content generators.

Nowadays, there are many businessmodels based on Internet technologies. Behind most of these,

we find that publicity and advertising are the main purpose of their different formats. For example,

broadly speaking, search engine marketing is targeted at companies that want their websites to be

placed at the top of a particular keyword search-result page, independent of their real relevance

on the Internet, because they expect to receive more clicks on their websites and thus increase the

C

2019 The Authors.

International Transactionsin Operational Research C

2019 International Federation ofOperational Research Societies

Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St, Malden, MA02148,

USA.

1612 F. Lopez-Navarrete et al. / Intl. Trans. in Op. Res. 26 (2019) 1611–1632

probability of obtaining more profit. Other examples are video-sharing web platforms in which

people share their videos, and advertisements in different formats are inserted into them. In this

particular case, not only the web platforms obtain profit from advertising but individual people can

also obtain some profit from it. A final example is TV on the Internet in which we can distinguish

between different formats such as video on demand (VoD), pay-per-view, broadcast (this is the

traditional format of TV), live streaming, Internet Protocol TV (IPTV; Montpetit and Sassatelli,

2018), and so on. Depending on the format, the revenues for the TV channels come either from

advertising or subscription/pay-per-view fees, or both.

For the reasons given above among others, there is great interest for many types of problems

arising in networks, in particular in wireless communications and/or its integration with the

Internet, in the Operations Research community (for recent references on the topic, see, e.g.,

Ribeiro et al., 2019; Risso et al., 2018; Morais and Mateus, 2019; Pag`

es-Bernaus et al., 2019;

Ye et al., 2019). Likewise, game theory has proved to be an interesting tool with which to analyze

different problems, such as allocation/sharing problems (see, e.g., Petrosjan and Zaccour, 2003;

Moretti and Patrone, 2008; Nagarajan and Soˇ

si´

c., 2008; Ackermann et al., 2014; Guajardo and

R¨

onnqvist, 2016; Guti´

errez et al., 2018) or cooperation (see, e.g., Ahmadi-Javid and Hoseinpour,

2018; Basso et al., 2019; Quintero-Araujo et al., 2019), from many different areas of knowledge, in

particular in communication network problems (see, e.g., Acemoglu and Ozdaglar, 2011; Gozalvez

et al., 2012; Zhu and Bas¸ar, 2013; Bahbouni and Moussa, 2017; Goyal and Kaushal, 2017; van

Hove, 2017; Taleizadeh et al., 2019; Wang et al., 2017; Colajanni et al., 2018; Geng and Mallik,

2018; Zeng et al., 2018). Furthermore, game theory has been also utilized to analyze engineering

problems in the broadest sense (Sanchez-Soriano,2013). Continuing with the examples given in the

foregoing paragraph, the market design to adjudicate the best positions in the search-result lists of

a keyword in the business of sponsoredsearch advertisements is based on auctions, and we can find

many papers in game theory literature on this subject (see, among others, Aggarwal et al., 2006;

Lim and Tang, 2006; Edelman et al., 2007; Feng et al., 2007; Varian, 2007; Aparicio et al., 2012;

Alonso et al., 2015). However, in the case of video-sharing web platforms or TV on the Internet

we can find a number of papers in the literature in which game theory is used to analyze several

technologically related problems, but very few using game theory to analyze the market design or

economic aspects of the different business models related to them (see, e.g., Bonastre et al. 2011;

Kodialam et al., 2010; Khan et al., 2011; Wang et al., 2012). Nevertheless, it was predicted that

video would represent up to 91% of all global consumer traffic by 2013 (Cisco Systems, Inc., 2009)

and so analyzing this market seems interesting. Likewise, IPTV service with its evolution toward

social TV is recognized as being one of the most promising, challenging, and profitable businesses

in the future (see, among others, Bouwman et al., 2008; Montpetit et al., 2009; Kodialam et al.,

2010; Bonastre et al., 2012; Montpetit and Medard, 2012).

Roughly speaking, under the umbrella of the term Smart TV (STV) system, we consider Internet

TV, Online TV, IPTV, and Web TV should be included, which all allow the delivery of television

shows and other video content on the Internet by video streaming technology.This content is created

by a wide variety of companies and individuals. The stakeholders in an STV system are the Internet

TV service providers, content creators, advertisers, and end users. Each of these stakeholders relate

to each other according to the scheme depicted in Fig. 1. The revenues for the STV system mainly

come from subscription fees, advertising, and pay-per-view. In this paper, we focus on two of the

stakeholders: the Internet TV service providers and the video content creators. In particular, we

C

2019 The Authors.

International Transactionsin Operational Research C

2019 International Federation ofOperational Research Societies