Problem
Background: You have been hired as a consultant by DaCast, an online pay-per view platform, where customers pay to access a specific piece of content. DaCast asks you to write a report on its pricing strategy of its new online movie "Rings of the Dragon".
DaCast is the sole owner of the property rights of the movie; this includes the movie, cast interviews, any other movie extras. The DaCast platform allows the movie to be offered in different streaming quality/speed, with or without ads.
For your report, you can assume DaCast is a monopolist in the relevant market. The requirements of the report are given below, your report should address each specific question in turn.
• DaCast is also interested in its pricing options for another potential scenario. As it turns out, standard customers want to watch the 60-minutes (mini) versions of the movie (all love scenes cut out). The HFL customers, on the other hand, want to watch the full movie, but they could watch the mini version if they have to*. Moreover, the value to an HFL is higher for both the full and mini movies than it is for a standard customer. Given this new scenario, what are the pricing strategy options available to DaCast? What do you suggest DaCast does to help raise its profit? Make sure you provide clear economic arguments to justify your answer.