Return of the Movie Night? Analyzing the Impact of Netflix Subscriptions on Offline Movie Spending

The subscription-based business model is disruptive in the copyright industries. More than a digitalized distribution channel, it fundamentally transforms both supply and demand sides regarding content provision and consumption. However, there is scant evidence about how and why it affects the local traditional industry. This study investigates the impact of the subscription-based business model on offline activity consumption in the motion picture industry. Leveraging a unique dataset with individuals' every transaction record and a difference-in-differences approach, we conclude that Netflix subscription increases offline movie consumption. We support that individuals have unmet hedonic and social demands with the imperfect disruptive technology. They, therefore, attend more hedonic and social activities, including movies, dining, entertainment, to satisfy their unmet needs. In addition, the identified effect is more pronounced for individuals with higher hedonic (i.e., younger people) and social (i.e., lower-income and residents of smaller towns) needs. Theoretical and practical implications are discussed. © 2022 International Conference on Information Systems, ICIS 2022: "Digitization for the Next Generation". All Rights Reserved.