Video quality downgrades in live-streaming: Net-neutrality Implications for platforms

Abstract

This research aims to empirically estimate the actual impact on service end-users amid an emerging debate on net neutrality. Without net neutrality, internet service providers can require content providers to pay extra for their internet traffic usage. To save costs on network usage fees, Twitch, a live streaming platform, implemented a policy of limiting video quality (i.e., resolution of video), which is the form of an indirect cost to the users. Given that video quality is a critical factor in live streaming, we examine the effect of this policy on the behavior of the platform's users. The findings confirm that limiting video quality has a negative impact on both the suppliers and buyers of the platform, i.e., streamers and viewers. However, the effect is heterogeneous across channel popularity, as more popular channels have higher switching costs, making it challenging for users to switch platforms or leave easily.