The Effect of Binge-Watching on the Subscription of Video on Demand: Results from Randomized Experiments

Abstract

We analyze outcomes of two randomized field experiments to study the effect of binge-watching on subscription to video on demand. In both cases, we offered access to subscription video on demand (SVoD) to a random set of households for several weeks and used 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 free trials. Our results suggest that induced binge-watchers deplete the content of interest to them very quickly, 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 offset the negative effect of binge-watching and lessen the concerns of binge-watchers with lack of content refresh, and thus these reminders may help content providers manage supply costs, which may otherwise become prohibitive with frequent updates to SVoD catalogs.

Abstract

We analyze the outcomes of two randomized field experiments to study the effect of binge-watching on subscription to video on demand. In both cases, we offered access to subscription VoD (SVoD) to a random set of households for several weeks and used another random set of households as a control group. In both cases, we find that the households that binge-watch TV shows are less likely to pay for SVoD after these free trials. Our results suggest that binge-watchers deplete the content of interest to them very quickly, which reduces their short-term willingness to pay for SVoD. We also show that recommendation reminders aimed at widening the content preferences of households offset the negative effect of binge-watching and lessen the concerns of binge-watchers with lack of content refresh. We discuss that these recommendation reminders may help content providers manage supply costs, which may otherwise become prohibitive with frequent updates to SVoD catalogs.