Experimental evidence on demand for “on-demand” entertainment

Jordi McKenzie, Paul Crosby, Joe Cox, Alan Collins

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This study applies stated-preference choice experiments and accompanying surveys to examine how Subscription Video on Demand (SVoD) has disrupted film and television consumption. We examine demand for a large set of traditional consumption alternatives, such as cinema and free-to-air TV, as well as newer internet-based subscription services, such as Netflix. We consider a range of alternative-specific product attributes —including price, viewing quality, and release delay— that allow us to quantify substitution effects and willingness-to-pay estimates. In addition, we also consider illegal viewing alternatives, with associated attributes related to (potential) punishment that inform on the efficacy of policy against digital piracy. Our primary results reveal that while some traditional alternatives remain important, consumers derive significant utility from SVoD, which provides a large surplus at current pricing. We also observe that marginal effects and willingness-to-pay estimates are sensitive to ex-ante interest in a film or TV series. Moreover, we provide evidence that consumers can be segmented in relation to (survey-reported) piracy experience, as well as perceptions of punishment risk and (industry) damage associated with piracy. We also find some evidence that increasing punishment probability and fines may discourage illegal consumption. Finally, we provide some validation of our results with a follow-up survey conducted six months after the experiment.
Original languageEnglish
Pages (from-to)98-113
Number of pages16
JournalJournal of Economic Behavior and Organization
Volume161
DOIs
Publication statusPublished - 1 May 2019

Keywords

  • Subscription video on demand
  • Stated preference
  • Digital piracy

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