Binge Yourself Out: The Effect of Binge Watching on the Subscription of Video on Demand

Abstract

We analyze outcomes of two randomized field experiments to study the effect of binge watching on the subscription of Video-on-Demand (SVoD). In both cases we offer access to SVoD service to a random set of households and use another random set of households as control group. In both cases, we find that the households induced to binge watch TV shows are less likely to pay for SVoD after the gift period. In our second experiment, we also show that treated households subscribe the service less despite enjoying more their experience with the VoD system. Our results suggest that binge watchers deplete the content of interest to them very fast, which reduces their short-term willingness to pay for SVoD. We also show that carefully crafted recommendation reminders aimed at widening the preferences of consumers for content lessen the concerns of binge watchers with content refresh and thus may help content providers manage supply costs that may otherwise become prohibitive with frequent updates to SVoD catalogs.

Keywords: Binge Watching, Subscription-based Video-on-Demand, Recommendation Reminders, Randomized Experiment