now the dominant medium in the US in terms of both ratings and revenue, and well
established abroad.
The purpose of this chapter has been to summarize the state of academic research on
television and online video markets. Looking across the material surveyed here, it is
somewhat difficult to connect the disparate themes. Economic research in television mar-
kets resembles an archipelago of distinct topics rather than a coherent canon. The theory
literature has identified important differences in predicted ad levels, program content,
prices, and welfare in simple models of ad-supported and mixed (ad- and subscriber-
supported) television markets and (perhaps declining) rationales for the support of public
service broadcasting. Bundling and bargaining (and their combination) have proven
important (and estimable) features of television markets. Policymakers regularly turn
their gaze on the industry with concerns about increasing consolidation in both the pro-
gramming and distribution markets, and especially the potential for foreclosure due to
vertical ownership affiliations between them. Similar concerns arise in online video mar-
kets, the development of which is (typically) outpacing research on its structure and
effects.
Television is an important economic, social, political, and cultural force, and there
remains much to do to improve our understanding of the economic mechanisms which
govern its production. Further developing theories of television markets to reflect their
multi-homing, multichannel, and multi-product nature is one, as is better connecting
empirical research to both the extant theory and any such extensions. Better understand-
ing the effects, economic and otherwise, of public service broadcasters is also essential,
particularly as their advertising and license fee revenue come under increasing threat from
economic and political forces. Building robust insights for practicing policymakers would
be welcome, for both the television and online video markets as well as their interdepen-
dence. Finally, analyzing what drives the significant heterogeneity in the organization of
television markets across countries and what are the consequences of these organizational
differences for both economic and non-economic outcomes would be welcome.
ACKNOWLEDGMENTS
I would like to thank Simon Anderson, Joel Waldfogel, Ali Yurukoglu, and especially Mark Armstrong for
helpful comments. The material in
Sections 7.3.1, 7.4.1, and 7.4.4 was developed with the help of the latter’s
significant input.
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338 Handbook of Media Economics
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