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

39 Pages Posted: 2 Oct 2017 Last revised: 23 Jul 2018

See all articles by Miguel Godinho de Matos

Miguel Godinho de Matos

School of Business and Economics, Católica-Lisbon; Carnegie Mellon University

Pedro Ferreira

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; Carnegie Mellon University - Department of Engineering and Public Policy

Date Written: July 13, 2018

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

Suggested Citation

Godinho de Matos, Miguel and Ferreira, Pedro, Binge Yourself Out: The Effect of Binge Watching on the Subscription of Video on Demand (July 13, 2018). Available at SSRN: https://ssrn.com/abstract=3045568 or http://dx.doi.org/10.2139/ssrn.3045568

Miguel Godinho de Matos (Contact Author)

School of Business and Economics, Católica-Lisbon ( email )

Palma de Cima
Lisbon, Lisboa 1649-023
Portugal

Carnegie Mellon University ( email )

Pittsburgh, PA 15213
United States

Pedro Ferreira

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

Carnegie Mellon University - Department of Engineering and Public Policy ( email )

Baker Hall 129
5000 Forbes Ave
Pittsburgh, PA 15213
United States

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