Portsmouth Business School

Thesis summary

The digital revolution is now well and truly underway. Vast quantities of rich media content (music, films, games etc.) are now available in digital formats that are compatible with an ever expanding selection of storage and playback devices. These range from the highly portable and iconic iPod to fully integrated home digital entertainment systems as well as everything else in-between. As a result of greater amounts and varieties of information being stored digitally, the entertainment market is moving inexorably towards a state of convergence, whereby single integrated devices are capable of fulfilling the full range of consumer entertainment needs without the need to resort to an array of other incompatible technologies to perform specific roles or functions. Resultantly, the current array of digital entertainment products is overflowing with video games consoles that also provide high definition movie playback facilities, portable music players that are also web browsers and mobile telephones that double as digital cameras. My PhD thesis involves a detailed investigation into a range of aspects relating to this emergent sector, exploring both its legitimate and illicit aspects from an economic perspective. Some of the themes that explored include testing for the presence of ‘first mover advantages’ for digital entertainment products and observing the behaviour of these markets in terms of cultural convergence, deviation from the law of one price and the operation of virtual economies. However, for all the benefits that the distribution and storage of entertainment goods digitally have brought to the market, there are some problematic aspects that require attention from an economic perspective. The reduced marginal cost of distribution and storage of the digital format leads to a scenario where many market participants look for open or unrestricted access to material. This is directly at odds with the economic theory surrounding property rights and the ability for suppliers to earn a return on their creative outputs. Some of the darker aspects of the market resulting from this situation will therefore be explored in depth: including the motivating factors behind participation in the market for illegal file sharing of copy written digital content, both abroad and in the UK.