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- The effect of shortening lock-in periods in telecommunication servicesPublication . Yang, Baojiang; Matos, Miguel Godinho de; Ferreira, PedroIn this research note, we study the welfare implications of shortening the length of the lock-in period associated with triple play contracts using household level data, from a large telecommunications provider, for a period of 6 months. Using a multinomial logit model to explain consumer behavior we show that, in our setting, shortening the length of the lock-in period decreases the aggregated profit of the firms in the market more than it increases consumer surplus. This result arises because shortening the length of the lock-in period increases churn, and the costs to set up service for the consumers that churn and join a new carrier supersede the increase in the consumers' willingness to pay for service when the length of the lock-in period shortens.
- The effect of binge-watching on the subscription of video on demand: results from randomized experimentsPublication . Matos, Miguel Godinho de; Ferreira, PedroWe analyze the outcomes of two randomized field experiments to study the effect of binge-watching on subscription to video on demand. In both cases, we offered access to subscription VoD (SVoD) to a random set of households for several weeks and used another random set of households as a control group. In both cases, we find that the households that binge-watch TV shows are less likely to pay for SVoD after these free trials. Our results suggest that binge-watchers deplete the content of interest to them very quickly, which reduces their short-term willingness to pay for SVoD. We also show that recommendation reminders aimed at widening the content preferences of households offset the negative effect of binge-watching and lessen the concerns of binge-watchers with lack of content refresh. We discuss that these recommendation reminders may help content providers manage supply costs, which may otherwise become prohibitive with frequent updates to SVoD catalogs.