Gravity and trade in video on demand services

28  March 2023    3:00 pm CEST

Annette Broocks, Joint Research Centre (JRC)

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This presentation is based on a paper co-authored with Zuzanna Studnicka

Over the last decade, watching videos online has become one of the primary uses of the internet, with streaming services accounting for more than 60% of global internet traffic. In this paper we use a novel data set on Netflix, the largest streaming platform worldwide, to estimate the patterns of catalogue availability (extensive margin) and number of clicks per title (intensive margin) across twenty countries. This data set also gives us a unique opportunity to estimate the importance of quality in viewing patterns. Our results show evidence of the gravity framework explaining both margins of Netflix watching. In addition, we find that there is a strong preference for domestic content, better-rated titles, and Netflix Original productions. These findings suggest that as Netflix produces more content, this will interact with its streaming dominance to provide a significant advantage in reaching viewers and promoting specific content.

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Annette Broocks

Annette Broocks is a scientific project officer in the Digital Economy Unit of the European Commission's Joint Research Centre. She holds a PhD in Economics from KU Leuven.

Related literature:

Aguiar, L. & Waldfogel, J. (2018). Netflix: global hegemon or facilitator of frictionless digital trade? Journal of Cultural Economics, 42(3), 419-445.

Disdier, A. C., Tai, S. H., Fontagn ́e, L., & Mayer, T. (2010). Bilateral trade of cultural goods. Review of World Economics, 145(4), 575-595.


Keywords: Netflix; subscription video on demand; gravity equation; services trade

JEL classification: F10, L82, Z10