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Is OTT Video a Substitute for TV? Policy Insights from Cord-Cutting

Author

Listed:
  • Jacob B. Malone

    (CableLabs)

  • Aviv Nevo

    (University of Pennsylvania)

  • Zachary Nolan

    (University of Delaware)

  • Jonathan W. Williams

    (University of North Carolina at Chapel Hill)

Abstract

The video entertainment industry is experiencing increases in over-the-top (OTT) video usage and cord-cutting behavior. Using unique panel data from 2012-2016, we document the behavior of the 2.4% of households who "cut the cord" annually. After dropping TV, these households increase internet usage by 22%, reduce payments to multiple-system operators (MSOs) by 50%, and 16% acquire new OTT video subscriptions. These results indicate meaningful substitution between OTT video and TV and suggest that competition authorities should consider broadening market definitions. MSOs appear to have little incentive to degrade OTT video, despite OTT video's contribution to declining TV revenues.

Suggested Citation

  • Jacob B. Malone & Aviv Nevo & Zachary Nolan & Jonathan W. Williams, 2023. "Is OTT Video a Substitute for TV? Policy Insights from Cord-Cutting," The Review of Economics and Statistics, MIT Press, vol. 105(6), pages 1615-1623, November.
    • Handle: RePEc:tpr:restat:v:105:y:2023:i:6:p:1615-1623
    DOI: 10.1162/rest_a_01132
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    Cited by:

    1. Opapun, Amnist & Khemakongkanonth, Chate & Srinuan, Pratompong, 2024. "Perceptions of Traditional Voice Calls and Over-the-Top (OTT) Communication Services among Thai Consumers," 24th ITS Biennial Conference, Seoul 2024. New bottles for new wine: digital transformation demands new policies and strategies 302469, International Telecommunications Society (ITS).
    2. Martin Peitz, 2024. "Digital Attention Intermediaries," CRC TR 224 Discussion Paper Series crctr224_2024_520, University of Bonn and University of Mannheim, Germany.

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