Measuring Consumer Preferences for Video Content Provision Via Cord‐Cutting Behavior

25 Pages Posted: 25 May 2017

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: Summer 2017

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. data set 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.

Suggested Citation

Prince, Jeffrey and Greenstein, Shane M., Measuring Consumer Preferences for Video Content Provision Via Cord‐Cutting Behavior (Summer 2017). Journal of Economics & Management Strategy, Vol. 26, Issue 2, pp. 293-317, 2017. Available at SSRN: https://ssrn.com/abstract=2972938 or http://dx.doi.org/10.1111/jems.12181

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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