Description:
As online video platforms (OVPs) prosper, advertisements in videos increase in both quantities and formats. Pre-roll and interpolation are two most popular advertising modes. While preroll disconnects with the content and mandatorily plays before videos, interpolation deeply embeds in the context. Installing ad-blockers may help viewers skip pre-rolls upon permission, but fails to block interpolations. Accordingly, we investigate the OVP's advertising mode and blocking policies via an analytical model by comparing content pricing and qualities under all possible cases. Main results suggest that the OVP may allow ad-blockers if its quality discrimination intensifies, unit income of pre-roll is not too high or consumers' ad-aversion level is high. Basic motivating reasons point to the cannibalisation effect on payment consumers and market expansion effect on total viewers. Besides, disallowing blockers or adopting interpolation leads to higher content fee and quality. Finally, social welfare peaks when the OVP permits ad-blockers and chooses interpolation