The effect of binge-watching on the subscription of video on demand: results from randomized experiments

We 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.info:eu-repo/semantics/publishedVersio

Peer influence in the diffusion of iPhone 3G over a large social network

In this paper, we study the effect of peer influence in the diffusion of the iPhone 3G across a number of communities sampled from a large dataset provided by a major European Mobile carrier in one country. We identify tight communities of users in which peer influence may play a role and use instrumental variables to control for potential correlation between unobserved subscriber heterogeneity and friends' adoption. We provide evidence that the propensity of a subscriber to adopt increases with the percentage of friends who have already adopted. During a period of 11 months, we estimate that 14 percent of iPhone 3Gs sold by this carrier were due to peer influence. This result is obtained after controlling for social clustering, gender, previous adoption of mobile Internet data plans, ownership of technologically advanced handsets, and heterogeneity in the regions where subscribers move during the day and spend most of their evenings. This result remains qualitatively unchanged when we control for changes over time in the structure of the social network. We provide results from several policy experiments showing that, with this level of effect of peer influence, the carrier would have hardly benefitted from using traditional marketing strategies to seed the iPhone 3G to benefit from viral marketing.info:eu-repo/semantics/publishedVersio

The effect of friends’ churn on consumer behavior in mobile networks

We study how consumers decide which tariff plan to choose and whether to churn when their friends churn in the mobile industry. We develop a theoretical model showing conditions under which users remain with their carrier and conditions under which they churn when their friends do. We then use a large and rich anonymized longitudinal panel of call detailed records to characterize the consumers’ path to death with unprecedented level of detail. We explore the structure of the network inferred from these data to derive instruments for friends’ churn, which is typically endogenous in network settings. This allows us to econometrically identify the effect of peer influence in our setting. On average, we find that each additional friend that churns increases the monthly churn rate by 0.06 percent. The observed monthly churn rate across our dataset is 2.15 percent. We also find that firms introducing the pre-paid tariff plans that charge the same price to call users inside and outside the carrier help retain consumers that would otherwise churn. In our setting, without this tariff plan the monthly churn rate could have been as high as 8.09 percent. We perform a number of robustness checks, in particular to how we define friends in the social graph, and show that our results remain unchanged. Our paper shows that the traditional definition of customer lifetime value underestimates the value of consumers and, in particular, that of consumers with more friends due to the effect of contagious churn and, therefore, managers should actively take into account the structure of the social network when prioritizing whom to target during retention campaigns.info:eu-repo/semantics/acceptedVersio

Controlling digital piracy via domain name system blocks: a natural experiment

We study the impact of batch DNS filtering of copyright-infringing websites, a novel administrative-based process that does not require judicial involvement. In partnership with a large telecommunication provider, we measure the impact of this intervention on piracy activity and the legal alternatives integrated into households' media subscription bundles, an aspect largely unexplored in prior literature. We find a significant reduction in Internet traffic, which proxies piracy activity. However, we do not observe statistically significant changes in the consumption of the legal alternatives under consideration, only a slight increase in TV viewership. To further understand these outcomes, we examine the heterogeneity of these results based on households' pre-block usage intensity of digital piracy and demographic characteristics. Our work contributes to the literature on the effectiveness of piracy control strategies and informs policy makers and industry practitioners about the benefits and limitations of DNS-based website blocking.info:eu-repo/semantics/publishedVersio

Target the ego or target the group: evidence from a randomized experiment in proactive churn management

We propose a new strategy for proactive churn management that actively uses social network information to help retain consumers. We collaborate with a major telecommunications provider to design, deploy, and analyze the outcomes of a randomized control trial at the household level to evaluate the effectiveness of this strategy. A random subset of likely churners were selected to be called by the firm. We also randomly selected whether their friends would be called. We find that listing likely churners to be called reduced their propensity to churn by 1.9 percentage points from a baseline of 17.2%. When their friends were also listed to be called, their likelihood of churn reduced an additional 1.3 percentage points. The client lifetime value of likely churners increased 2.1% with traditional proactive churn management, and this statistic becomes 6.4% when their friends were also listed to be called by the firm. We show that, in our setting, likely churners receive a signal from their friends that reduces churn among the former. We also discuss how this signal may trigger mechanisms akin to both financial comparisons and conformity that may explain our findings.info:eu-repo/semantics/acceptedVersio

The effect of subscription video-on-demand on piracy: evidence from a household-level randomized experiment

We partner with a major multinational telecommunications provider to analyze the effect of subscription video-on-demand (SVoD) services on digital piracy. For a period of 45 consecutive days, a group of randomly selected households who used BitTorrent in the past were gifted with a bundle of TV channels with movies and TV shows that could be streamed as in SVoD. We find that, on average, households that received the gift increased overall TV consumption by 4.6% and reduced Internet downloads and uploads by 4.2% and 4.5%, respectively. However, and also on average, treated households did not change their likelihood of using BitTorrent during the experiment. Our findings are heterogeneous across households and are mediated by the fit between the preferences of households in our sample for movies and the content available as part of the gifted channels. Households with preferences aligned with the gifted content reduced their probability of using BitTorrent during the experiment by 18% and decreased their amount of upload traffic by 45%. We also show using simulation that the size of the SVoD catalog and licensing window restrictions limit significantly the ability of content providers to match SVoD offerings to the preferences of BitTorrent users. Finally, we estimate that households in our sample are willing to pay at most $3.25 USD per month to access a SVoD catalog as large as Netflix's in the United States. Together, our results show that, as a stand-alone strategy, using legal SVoD to curtail piracy will require, at the minimum, offering content much earlier and at much lower prices than those currently offered in the marketplace, changes that are likely to reduce industry revenue and that may damage overall incentives to produce new content while, at the same time, curbing only a small share of piracy.info:eu-repo/semantics/acceptedVersio

The effect of shortening lock-in periods in telecommunication services

In 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.info:eu-repo/semantics/publishedVersio

Culling the herd: using real-world randomized experiments to measure social bias with known costly goods

Peer ratings have become increasingly important sources of product information, particularly in markets for information goods. However, in spite of the increasing prevalence of this information, there are relatively few academic studies that analyze the impact of peer ratings on consumers transacting in real-world marketplaces. In this paper, we partner with a major telecommunications company to analyze the impact of peer ratings in a real-world video-on-demand market where consumer participation is organic and where movies are costly and well known to consumers. After experimentally changing the initial conditions of product information displayed to consumers, we find that, consistent with the prior literature, peer ratings influence consumer behavior independently from underlying product quality. However, we also find that, in contrast to the prior literature, there is little evidence of long-term bias as a result of herding effects, at least in our setting. Specifically, when movies are artificially promoted or demoted in peer rating lists, subsequent reviews cause them to return to their true quality position relatively quickly. One explanation for this difference is that consumers in our empirical setting likely had more outside information about the true quality of the products they were evaluating than did consumers in the studies reported in prior literature. Although tentative, this explanation suggests that in real-world marketplaces where consumers have sufficient access to outside information about true product quality, peer ratings may be more robust to herding effects and thus provide more reliable signals of true product quality than previously thought.info:eu-repo/semantics/acceptedVersio

Innovative Smart Grid Solutions for Network Planning and Access

Smart Grids are the cornerstone for Distribution System Operators transformation. Having new solutions to deal with historical and future problems is key to ensure a smooth transition to an advanced power system that not only integrate a large share of renewables and distributed energy resources (e.g. storage, electrical vehicles), but also requires efficient operation, better planning and exceptional customer service. EDP Distribuição is at the forefront of this transformation, as it is developing Inovgrid, a smart grid project in Évora city (Portugal), where a smart grid infrastructure was deployed, and new data is now available to incorporate in planning and access tools and procedures, hence contributing to a Smarter Grid. This paper discusses the results that EDP Distribuição has attained so far in these areas of the smart grid development, as well as the projected evolution of these innovative approaches to the future of the distribution grid, which are being developed in European projects like SuSTAINABLE (www.sustainableproject.eu)