A Study of the Japanese Digital Content Market

Donghun Kim, Ph.D.
Philip Sugai, D.Sc.

Abstract
In this paper, the impact that the internet access device has upon consumer loyalty behaviors relative to internet content was explored. To do so, a mixed logit demand function for mobile and PC subscribers to digital content was estimated and consumers’ willingness to pay for attributes related to specific content providers and their levels of service quality were measured. It was found that significant differences in loyalty and willingness to pay for service quality factors existed between mobile and PC internet content subscribers, suggesting that while content may be developed as device independent, consumers interact differently with similar internet content accessed through different devices. Specifically, the willingness to pay for more robust and more frequently updated content was on average higher in the mobile segment than in the PC segment. In addition, the overall switching costs consumers attributed to specific content providers via the mobile channel were far higher than through the PC channel. These results suggest that more robust content management systems must be developed to accommodate for such differences in consumer behavior.

Keywords: Device Independence, Switching Costs, Consumer Loyalty, Mobile and PC contents, Hierarchical Bayesian model, a Mixed logit Model