Digital Television and Program Pricing

This article explores several ways that the development of digital television technology can improve pricing efficiency, or price discrimination, by program producer/distributors—especially by the movie studios. These include development of video-on-demand systems, improved quantity discounting, and of particular interest, improved segmentation of consumers according to their demands for different levels of television transmission quality. I consider HDTV and DVD as examples of quality segmentation opportunities, and conclude that the result will be more revenues for program distributors and thus increased production investments in movies and other programs.