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Information Systems Research (2025) AI Processed Human Reviewed
Return of the Movie Night? Analyzing the Impact of Netflix Subscriptions on Offline Movie Spending
This study investigates how acquiring a subscription to a video streaming service like Netflix affects an individual's offline movie theater spending and consumption habits. Using transaction records from a popular mobile wallet app in South Korea, the authors apply coarsened exact matching and difference-in-differences analyses to estimate causal effects.
Problem
Although digital subscription models are widely believed to cannibalize physical consumption in copyright industries, it remains unclear whether streaming services substitute for offline movie theaters. Because traditional cinema provides distinct social and hedonic value that personal-device streaming cannot fully replicate, there is a need to examine whether these channels act as substitutes or complements.
Outcome
- Subscribing to Netflix leads to a statistically significant increase in subsequent offline movie ticket spending and viewing frequency.\n- Post-subscription offline moviegoing is frequently accompanied by increased spending on complementary social and hedonic activities such as dining out and entertainment.\n- The positive treatment effect is more pronounced among younger and lower-income individuals who exhibit higher ex-ante social and hedonic needs.\n- Subscribers to premium Netflix plans show a higher post-subscription increase in offline cinema consumption, supporting expectation disconfirmation theory.
What it means for you
- CIO / IT Executive: On Monday morning, initiate a review of our current digital content delivery infrastructure to identify potential synergies and opportunities to bundle or cross-promote offline entertainment experiences with our streaming service offerings, especially targeting younger and lower-income demographics.
- IT Manager: On Monday morning, analyze user engagement data for our streaming platform, specifically looking for patterns of usage among younger and lower-income users, and investigate if there are any integrations or notification systems we can implement to suggest local cinema showtimes or associated dining deals as complementary activities.
- Business Strategist: On Monday morning, schedule a meeting with the marketing and partnerships teams to explore co-marketing opportunities with local cinemas and restaurants, focusing on developing bundled packages or loyalty programs that incentivize a 'Netflix and then Out' experience, particularly targeting younger demographics and those with perceived higher hedonic needs.
- Researcher: On Monday morning, begin designing a follow-up study that specifically quantifies the causal impact of premium streaming plan subscriptions on offline movie spending and complementary hedonic spending, utilizing a controlled experiment or a refined difference-in-differences approach to test expectation disconfirmation theory more rigorously.
- Policymaker: On Monday morning, begin drafting a policy brief that examines the potential for digital entertainment subscriptions to indirectly stimulate local economies through increased spending on complementary offline social and hedonic activities, and explore incentives for businesses to create integrated entertainment packages.