philadelphia, may 2–4, 2005 is there evidence that vod cannibalizes dvd rentals? a spatial...
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Philadelphia, May 2–4, 2005
www.locationintelligence.net
Is There Evidence that VOD Cannibalizes DVD Rentals?
A Spatial Regression Analysis
Dr. Amy Liu, Marketing Systems Group
Kevin Babyak, Marketing Systems Group
Dr. Paul Rappoport, Temple University
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Outline
The HypothesesThe DataThe ModelResultsConclusions
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Hypotheses
The availability of video-on-demand (VOD) leads to a reduction of DVD rentals.
The use of VOD leads to an increased reduction of DVD rentals.
Households demand for DVD rentals depends on the distance a household is from a DVD rental store
Philadelphia, May 2–4, 2005
www.locationintelligence.net
DatabasesCENTRIS Omnibus Survey
Household RDD survey50,000+ observationsTrack DVD rentals, VOD availability and useProjected activity down to Census Block
Group
Location of Video/DVD rental stores
Philadelphia, May 2–4, 2005
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CENTRIS
http://www.centris.com
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Predicted VOD Penetration
Q4 2004
2.5%
Philadelphia, May 2–4, 2005
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DVD Rentals by Age
0
20
40
60
80
100
120
140
160
Ind
ex o
f U
sag
e (1
00 =
Ave
rag
e)
18-34 35-44 45-65 65+
Philadelphia, May 2–4, 2005
www.locationintelligence.net
DVD Rentals by Income
0
20
40
60
80
100
120
140
160
Ind
ex o
f U
sag
e (1
00 =
Ave
rag
e)
<25k 25k - 50k 50k - 100k >100k
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Spatial Regression Model
Variables
Household Usage
VOD availability
Store locations
Distance to store
Demographics
Poisson Regression
DVD usage = f(Income, Age, Distance, VOD usage, VOD availability, Children) (+) (-) (-) (-) (-) (+)
Model of DVD Rentals (counts)
Philadelphia, May 2–4, 2005
www.locationintelligence.net
VOD availability by itself is marginally importantVOD usage triggers substitutionVOD usage expected to grow – will lead to an
increasing impact on DVD rentalsDVD rental cannibalization less pronounced
when store is close Substitution is most pronounced for younger
households, households with higher incomes and households with children
Results
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Philadelphia, May 2–4, 2005
www.locationintelligence.net
1 Cable VOD roll-out strategies will have a large impact on the traditional DVD
rental market. 2 The push towards digital cable will
accelerate this cannibalization 3 VOD availability is limited – real impact of
cannibalization is still a few years off 4 The VOD – DVD battleground will be in
areas of high income, younger households
Conclusions
Philadelphia, May 2–4, 2005
www.locationintelligence.net
Contact Information
1. Amy Liu – Marketing Systems Group, [email protected], 215-653-7100 x143
2. Kevin Babyak – Marketing Systems Group, [email protected], 215-653-7100, x118
3. Paul Rappoport – Department of Economics, Temple University, [email protected], 215-913-1775