Measuring Consumer Preferences for Video Content Provision via Cord-Cutting Behavior

45 Pages Posted: 31 Mar 2013 Last revised: 13 Feb 2015

See all articles by Jeffrey Prince

Jeffrey Prince

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Shane M. Greenstein

Harvard University - Technology & Operations Management Unit; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2015

Abstract

The television industry is undergoing a generational shift in structure; however, many demand-side determinants are still not well understood. We model how consumers choose video content provision among: over-the-air (OTA), paid subscription to cable or satellite, and online streaming (also known as over-the-top, or OTT). We apply our model to a U.S. dataset encompassing both the digital switchover for OTA and the emergence of OTT, along with a recession, and use it to analyze cord-cutting behavior (i.e., dropping of cable/satellite subscriptions). We find high levels of cord cutting during this time, and evidence that it became relatively more prevalent among low-income and younger households – suggesting this group responded to changes in OTA and streaming options. We find little evidence of households weighing relative content offerings/quality when choosing their means of video provision during the timespan of our data. This last finding has important ramifications for strategic interaction between content providers.

Keywords: Telecommunications, Cord-cutting, video, digital switchover, online streaming, content

JEL Classification: L96

Suggested Citation

Prince, Jeffrey and Greenstein, Shane M., Measuring Consumer Preferences for Video Content Provision via Cord-Cutting Behavior (February 2015). TPRC 41: The 41st Research Conference on Communication, Information and Internet Policy; Kelley School of Business Research Paper No. 15-22. Available at SSRN: https://ssrn.com/abstract=2241680 or http://dx.doi.org/10.2139/ssrn.2241680

Jeffrey Prince (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

Shane M. Greenstein

Harvard University - Technology & Operations Management Unit ( email )

Boston, MA 02163
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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