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Streaming Service Strategy Evaluation
A popular video streaming service is considering introducing a new, cheaper subscription tier. This tier would cost $5 less per month than the standard plan. However, to offset the lower price, users on this tier would be required to watch a 60-second unskippable advertisement before every video and navigate through two extra menu screens to access their content. The standard, more expensive tier would remain ad-free with the current streamlined interface.
Critique the company's strategy for the new, cheaper subscription tier from a user's perspective. In your evaluation, use the principle that users aim to maximize the value they receive from an action by weighing the expected benefits against the expected efforts. Will this new tier likely be successful? Justify your position.
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Design Science
Economics
Economy
Introduction to Microeconomics Course
Social Science
Empirical Science
Science
CORE Econ
Ch.2 Technology and incentives - The Economy 2.0 Microeconomics @ CORE Econ
Evaluation in Bloom's Taxonomy
The Economy 2.0 Microeconomics @ CORE Econ
Cognitive Psychology
Psychology
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Streaming Service Strategy Evaluation
A user is deciding between two online services to complete a task.
- Service A: Has a $20 fee. The interface is streamlined, and the user estimates it will take them 30 minutes to complete the task.
- Service B: Is free to use. The interface is less intuitive, and the user estimates it will take them 90 minutes to complete the same task.
The user values their personal time at $30 per hour. To maximize their overall utility by balancing monetary cost and the cost of their effort, which service should they choose and why?
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