TY - JOUR
T1 - Experimental evidence on demand for “on-demand” entertainment
AU - McKenzie, Jordi
AU - Crosby, Paul
AU - Cox, Joe
AU - Collins, Alan
N1 - Funding Information:
This research was supported by a Macquarie University Research Development Grant. We are grateful to Michiel Bliemer, William H. Greene and John Rose for guidance with the design and estimation. We thank participants of (i) 4th North American Workshop on Cultural Economics, Montreal (November, 2017), (ii) 19th Mallen Conference on Filmed Entertainment, New York (November, 2017), and (iii) 14th International WEAI Conference, Newcastle (January, 2018) for comments. We also thank the editor and two anonymous reviewers. The authors are responsible for any errors.
Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2019/5
Y1 - 2019/5
N2 - This study applies stated-preference choice experiments and accompanying surveys to examine how Subscription Video on Demand (SVoD) has disrupted film and television consumption. We examine demand for a large set of traditional consumption alternatives, such as cinema and free-to-air TV, as well as newer internet-based subscription services, such as Netflix. We consider a range of alternative-specific product attributes —including price, viewing quality, and release delay— that allow us to quantify substitution effects and willingness-to-pay estimates. In addition, we also consider illegal viewing alternatives, with associated attributes related to (potential) punishment that inform on the efficacy of policy against digital piracy. Our primary results reveal that while some traditional alternatives remain important, consumers derive significant utility from SVoD, which provides a large surplus at current pricing. We also observe that marginal effects and willingness-to-pay estimates are sensitive to ex-ante interest in a film or TV series. Moreover, we provide evidence that consumers can be segmented in relation to (survey-reported) piracy experience, as well as perceptions of punishment risk and (industry) damage associated with piracy. We also find some evidence that increasing punishment probability and fines may discourage illegal consumption. Finally, we provide some validation of our results with a follow-up survey conducted six months after the experiment.
AB - This study applies stated-preference choice experiments and accompanying surveys to examine how Subscription Video on Demand (SVoD) has disrupted film and television consumption. We examine demand for a large set of traditional consumption alternatives, such as cinema and free-to-air TV, as well as newer internet-based subscription services, such as Netflix. We consider a range of alternative-specific product attributes —including price, viewing quality, and release delay— that allow us to quantify substitution effects and willingness-to-pay estimates. In addition, we also consider illegal viewing alternatives, with associated attributes related to (potential) punishment that inform on the efficacy of policy against digital piracy. Our primary results reveal that while some traditional alternatives remain important, consumers derive significant utility from SVoD, which provides a large surplus at current pricing. We also observe that marginal effects and willingness-to-pay estimates are sensitive to ex-ante interest in a film or TV series. Moreover, we provide evidence that consumers can be segmented in relation to (survey-reported) piracy experience, as well as perceptions of punishment risk and (industry) damage associated with piracy. We also find some evidence that increasing punishment probability and fines may discourage illegal consumption. Finally, we provide some validation of our results with a follow-up survey conducted six months after the experiment.
KW - Digital piracy
KW - Stated preference
KW - Subscription video on demand
UR - http://www.scopus.com/inward/record.url?scp=85063758521&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2019.03.017
DO - 10.1016/j.jebo.2019.03.017
M3 - Journal Article
AN - SCOPUS:85063758521
SN - 0167-2681
VL - 161
SP - 98
EP - 113
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
ER -