Gravity and trade in video on demand services

Abstract

Over the last decade, online video consumption has become one of the primary uses of the internet, with streaming services accounting for more than 65% 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 the 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 viewers have a preference for domestic content, better-rated titles, and Netflix Original foreign productions. These insights suggest that as Netflix continues to expand its content library, it will further leverage its streaming dominance in reaching viewers and promoting specific content.