Return of the Movie Night? Analyzing the Impact of Netflix Subscriptions on Offline Movie Spending

Workshop’s Topic: The subscription-based business model is a game changer in the copyright industry. More than a digitized distribution channel, it is fundamentally changing both the supply and demand side by offering new forms of content creation, delivery and consumption. However, the impact of these business models on the local offline industry is less well researched, especially in the case of the film industry. This study examines the impact of the subscription-based business model on offline consumption in the movie industry. Using a unique dataset containing all transactions of individuals and a difference-in-differences approach, we show that, interestingly, the Netlix subscription increases offline movie consumption. Based on the argument that individuals have unmet social and hedonic needs that are imperfectly fulfilled by subscription-based services such as Netlix, we show that offline movie consumption actually increases after subscription, accompanied by social and hedonic activities such as restaurant visits and spending on entertainment. We also demonstrate that the observed effect on offline movie consumption is more pronounced for individuals with higher social (i.e., lower income) and hedonic (i.e., younger) needs. Our work provides clear implications for managers and policy makers dealing with both subscription-based platforms such as Netfix and the traditional offline movie industry. In addition, we provide theoretical implications for the study of subscription-based platforms, imperfect channel substitution, and the role of social and hedonic value in technology-enabled platforms.

Time and Location: 9:00-10:00 AM (GMT+8), Room A523 (School of Management)

Language: Bilingual (Chinese and English)