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.