Multihoming Alliances and Price Competition.

This article analyzes the impact of alliances between competing over-the-top (OTT) subscription video streaming services that facilitate consumer multihoming—holding subscriptions to multiple services—on price competition, profits, and welfare. Using a game-theoretic model with horizontally differentiated services, it finds that such alliances relax price competition and increase profits for all firms when content differentiation is low, but intensify competition and can harm nonpartnering services’ profits when differentiation is high. The study also shows that a focal service prefers partnering with a competitor offering higher-quality content but a smaller loyal consumer base, explaining real-world alliances like Amazon Prime Video’s partnership with HBO rather than Netflix. Extensions considering bundle discounts and delayed consumer awareness of alliances confirm the robustness of these findings, which have implications for managers and policymakers regarding strategic partnerships and consumer welfare in digital content markets.