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The Effect of Binge-Watching on the Subscription of Video on Demand: Results from Randomized Experiments

Author

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  • Miguel Godinho de Matos

    (Católica Lisbon School of Business and Economics, Universidade Católica Portuguesa, 1649-023 Lisbon, Portugal)

  • Pedro Ferreira

    (Heinz College and Department of Engineering and Public Policy, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

We analyze the outcomes of two randomized field experiments to study the effect of binge-watching on subscription to video on demand. In both cases, we offered access to subscription VoD (SVoD) to a random set of households for several weeks and used another random set of households as a control group. In both cases, we find that the households that binge-watch TV shows are less likely to pay for SVoD after these free trials. Our results suggest that binge-watchers deplete the content of interest to them very quickly, which reduces their short-term willingness to pay for SVoD. We also show that recommendation reminders aimed at widening the content preferences of households offset the negative effect of binge-watching and lessen the concerns of binge-watchers with lack of content refresh. We discuss that these recommendation reminders may help content providers manage supply costs, which may otherwise become prohibitive with frequent updates to SVoD catalogs.

Suggested Citation

  • Miguel Godinho de Matos & Pedro Ferreira, 2020. "The Effect of Binge-Watching on the Subscription of Video on Demand: Results from Randomized Experiments," Information Systems Research, INFORMS, vol. 31(4), pages 1337-1360, December.
    • Handle: RePEc:inm:orisre:v:31:y:2020:i:4:p:1337-1360
    DOI: 10.1287/isre.2020.0948
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    Cited by:

    1. Song, Lianlian & Zhang, Qiuxiang & Hu, Baixue & Mou, Jian, 2022. "To resist or to purchase: The causal mechanism of binge-watching and program purchase," Journal of Retailing and Consumer Services, Elsevier, vol. 68(C).
    2. Gänßle, Sophia & Kunz-Kaltenhaeuser, Philipp, 2020. "What drives binge-watching? An economic theory and analysis of impact factors," Ilmenau Economics Discussion Papers 138, Ilmenau University of Technology, Institute of Economics.

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