The Effect of Over-the-Top Media Services on Piracy Search: Evidence from a Natural Experiment

Marketing Science, Forthcoming

65 Pages Posted: 14 Jul 2020

See all articles by Shijie Lu

Shijie Lu

University of Houston - C.T. Bauer College of Business

Koushyar Rajavi

affiliation not provided to SSRN

Isaac M. Dinner

Indeed

Date Written: June 2020

Abstract

The rise of over-the-top (OTT) video streaming services has raised the question of how this new form of digital media affects consumer search for pirated content. We address this question by using Netflix’s unexpected announcement of a global market expansion in January 2016 and the subsequent block by the primary telecommunications firm in Indonesia as an exogenous shock to the supply of OTT services in that country. Using synthetic control methods, we compare the change in piracy search between Indonesia and 40 Asian countries where Netflix simultaneously entered and remained available. Netflix’s failure to launch in Indonesia leads to a 19.7% increase in search for pirated movies and TV shows in Indonesia, relative to the other countries, suggesting a net substitution of piracy for OTT services. Comparison of treatment effects between exclusive and nonexclusive content shows that the treatment effect is driven by both a combination of an expansion of the market for piracy and a substitution between piracy and OTT services. We also find that the treatment effect is stronger for less dialogue-oriented content, which is consistent with the greater appeal of dialogue-light content to non-English-speaking consumers.

Keywords: piracy, over-the-top service, video streaming, synthetic control, natural experiment

Suggested Citation

Lu, Shijie and Rajavi, Koushyar and Dinner, Isaac M., The Effect of Over-the-Top Media Services on Piracy Search: Evidence from a Natural Experiment (June 2020). Marketing Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3632530

Shijie Lu (Contact Author)

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States

Koushyar Rajavi

affiliation not provided to SSRN

Isaac M. Dinner

Indeed ( email )

721 Domain Drive
Austin, TX 78758
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
196
Abstract Views
2,057
rank
192,343
PlumX Metrics