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Measuring Consumer Preferences for Video Content Provision via Cord-Cutting Behavior

Author

Listed:
  • Jeffrey T. Prince

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

  • Shane Greenstein

    (Department of Management and Strategy, Kellogg School of Management, Northwestern University)

Abstract
The television industry is undergoing a generational shift in structure; however, many demand-side determinants are still not well understood. We model how consumers choose video content provision among: over-the-air (OTA), paid subscription to cable or satellite, and online streaming (also known as over-the-top, or OTT). We apply our model to a U.S. dataset encompassing both the digital switchover for OTA and the emergence of OTT, along with a recession, and use it to analyze cord-cutting behavior (i.e., dropping of cable/satellite subscriptions). We find high levels of cord cutting during this time, and evidence that it became relatively more prevalent among low-income and younger households – suggesting this group responded to changes in OTA and streaming options. We find little evidence of households weighing relative content offerings/quality when choosing their means of video provision during the timespan of our data. This last finding has important ramifications for strategic interaction between content providers.

Suggested Citation

  • Jeffrey T. Prince & Shane Greenstein, 2013. "Measuring Consumer Preferences for Video Content Provision via Cord-Cutting Behavior," Working Papers 2013-09, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    • Handle: RePEc:iuk:wpaper:2013-09
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    References listed on IDEAS

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    Cited by:

    1. Oliver Budzinski & Sophia Gaenssle & Nadine Lindstädt-Dreusicke, 2021. "The battle of YouTube, TV and Netflix: an empirical analysis of competition in audiovisual media markets," SN Business & Economics, Springer, vol. 1(9), pages 1-26, September.
    2. McKenzie, Jordi & Crosby, Paul & Cox, Joe & Collins, Alan, 2019. "Experimental evidence on demand for “on-demand” entertainment," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 98-113.
    3. Bhubaneswari Bisoyi & Vivek Mishra & Biswajit Das & Ipseeta Satpathy, 2024. "Role of E-Business Driven OTT Platforms in Influencing Consumer’s Intention to Cut the Cable Cord," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 49(1), pages 82-96, February.
    4. Agarwal, Reeti & Mehrotra, Ankit & Sharma, Veenu & Papa, Armando & Malibari, Areej, 2023. "Over-the-top (OTT) retailing in the post pandemic world. Unveiling consumer drivers and barriers using a qualitative study," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
    5. Jung, Juan & Melguizo, Ángel, 2023. "Is your netflix a substitute for your telefunken? Evidence on the dynamics of traditional pay TV and OTT in Latin America," Telecommunications Policy, Elsevier, vol. 47(1).

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    More about this item

    Keywords

    Telecommunications; Cord-cutting; video; digital switchover; online streaming; content;
    All these keywords.

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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