In general, when the market provides products that are not incompatible with each other, and when consumer only make one buying decision, the players in the market will face this kind of competition. 2. If BSB scraped its D-MAC experiment and opted for PAL technology, it would position itself in a very different competitive landscape. First, the start-up cost for D-MAC technology is 5x of the cost for PAL, while the price, sight and sound performance for both standards are marginal. It also takes longer for D-MAC technology to achieve operating break-even milestone. BSB could save a lot of costs if it would opt for PAL. What’s more important is that by using PAL, BSB would compete with Sky in a more organic way because both their programs will be compatible with the same technology standard. After installation of the dishes, now customers can subscribe and watch TV series from both providers. Additionally, the early stage dishes sold and installed by Sky would help BSB capture the existing market without additional marketing effort. By using the same standard of dishes, customers don’t need to make choices between two mutually exclusive options which increase consumer welfare and reduce dead weight loss. The marginal customer would still be in the market. Consequently, BSB and Sky would compete on the program selection and quality to capture more market which also increase the overall market welfare.
3. The initial formation of BSB was very strategic. Having ownership by multiple entities not
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- Fall '15
- Marketing, Consultative selling, Television program, Satellite television, BSB, British Satellite Broadcasting