Pricing model for internet-based multi-class Video-On-Demand(VOD) services

This paper presents an optimal Pay-Per-View (PPV) price decision model for maximizing an Internet based Video-On-Demand (VOD) service provider’s revenues, taking into account the service provider’s service quality and consumers’ willingness to pay. The model considers multi-class VOD services with differentiated qualities and determines the optimal price for each class through simulations. The simulation results show that as long as all the multi-class services have non-zero demands, the differential pricing system provides more revenues than the uniform pricing system that prevails in the current VOD market. To test the robustness of the model, simulations were performed with gradually increasing customer demands or system workloads. The simulation results show that even with substantial customer demands or system workloads, self-adjustment mechanism of the model works and the system reaches a stable status in equilibrium. This paper also presents a numerical example of guaranteeing Quality-of-Service (QoS) through pricing strategies as a short-term measure.