To offer or not to offer? Bullet screen strategies for competing video platforms with vertical differentiation

A considerable number of video platforms, including Bilibili and Acfun, have opted to provide bullet screens in conjunction with their video content. The question of whether and when to provide bullet screens represents a significant challenge, particularly given the variability in consumer preferences for such screens. In order to address this challenge, this paper presents a game-theoretic model for the analysis of optimal bullet screen strategies for competing media platforms. Although conventional wisdom suggests that offering bullet screens may be beneficial for video platforms, our results indicate that if the quality of bullet content is sufficiently low and the proportion of consumers who prefer bullet content is sufficiently high, both platforms have no incentive to offer bullet screens. In addition, if the quality of the bullet screen content and the proportion of consumers who prefer bullet content are moderate, only the low-quality platform will offer the bullet screen. We also find that if the quality of the bullet screen content is high enough, both platforms will provide bullet screens. Furthermore, our results show that given its competitor's bullet screen strategy (providing or not providing bullet screen features), only when the quality of bullet screen features is sufficiently large, the video platform who offers bullet screen features can set higher advertising prices. We further extend the basic model to consider asymmetric bullet screen qualities of the two platforms, and examine the impact of differences in bullet screen content quality on the optimal strategies of the video platforms. Our study provides important managerial insights for video platforms, especially on whether to provide bullet screen features in a competing environment.