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How Video Rental Patterns Change as Consumers Move Online

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journal contribution
posted on 01.10.2012 by Alejandro Zentner, Michael Smith, Cuneyd Kaya

How will consumption patterns change when consumers move from brick-and-mortar to Internet markets? If consumers purchase more niche products online than at brick-and- mortar stores, does this have something to do with the channel or is this solely due to selection effects: the types of consumers who decide to use the Internet channel or the types of products that consumers select to purchase online?

We address these questions using customer-level rental panel data obtained from a national video chain as it was closing many of its local stores. This allows us to observe how behavior changes when consumers are forced to move from brick-and-mortar to online consumption.

Our results suggest that when consumers move from brick-and-mortar to online channels they are significantly more likely to rent “niche” titles relative to “blockbusters.” This suggests that a significant amount of niche product consumption online is due to the nature of the channel, not just due to selection effects.

History

Publisher Statement

This is an unedited manuscript that has been accepted for publication. A definitive version is available from INFORMS at http://dx.doi.org/10.1287/mnsc.2013.1731

Date

01/10/2012

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