Vertical integration and the make-vs-buy decision
A firm selling into a market controlled by a single downstream buyer faces a structural choice most students never see modeled explicitly: compete for shelf space on someone else's terms, or acquire the shelf. The simulation makes that tension concrete — exclusivity buys a supplier the whole market at the cost of a smaller one, sharing buys everyone a bigger market at the cost of splitting it, and acquisition removes the negotiation entirely by putting both ends of the chain under one roof.
The simulation is built so you can teach several angles of that tension:
- Exclusive vs. shared carriage. The Platform can carry exactly one Studio exclusively, every Studio at once, or no one — and how much extra demand a broader lineup generates can be configured, so the Studios' incentives to court exclusivity and the Platform's incentive to diversify can be tuned to pull against each other more or less strongly.
- An investment option. Starting from a configurable round, each Studio can pay a one-time cost to permanently lower its production cost — letting the class explore how the balance of power between Studios and the Platform shapes the incentive to invest in efficiency, not just how to price around it.
- A real acquisition. Starting from a configurable round, a live, out-loud negotiation can be run in class over whether a Studio acquires the Platform outright — and if it does, that Studio's team takes over the Platform's decisions for the rest of the session.
The Streaming Wars
Each market has several Studios and one Streaming Platform. Every round, each Studio offers the Platform two fees — one for exclusive carriage, one for non-exclusive — and the Platform picks exactly one outcome: carry a single Studio exclusively, carry every Studio non-exclusively (splitting a bigger audience across all of them), or carry no one.
A Studio left off the Platform takes a loss instead of earning a fee. When enabled, Studios can invest to lower their costs partway through, and — starting from a configurable round — a Studio can acquire the Platform outright in a live negotiation, taking over its decisions from then on.
