Disney + offers a streaming service for subscribers. The service offers a selection of documentaries, TV shows,
Question:
Disney + offers a streaming service for subscribers. The service offers a selection of documentaries, TV shows, animated tales and blockbuster movies. Recently, Disney has been criticized for adding Rated-R, "adult" content into Disney +. On the other hand, there is a constant pressure from the competitors such as HBO Max and Netflix, which offer adult content. Amid this dilemma, Disney executives are now thinkinghow to allocate the next year's budget on the new content.
Disney executives told investors that next year's fiscal budget will be $33 billion dollars on new content. The executives must make a decision on how to allocate the $33 billion budget. Disney must choose between adult content and kid friendly content. The research revealed the strategic game as follows, in which payoffs are represented as profits in billions.
Disney | Comp. | Adult | Kid Friendly |
Adult | 50,50 | 30,60 | |
Kid Friendly | 40,60 | 80,40 |
Is there a dominant strategy of Disney +?
Is there a dominant strategy of competitors?
What is the Nash Equilibrium of this game?
How would Disney allocate $33billion dollars between adult and kid friendly content in the equilibrium?
Make Sure that you show your work.