Intermediate Microeconomics - II

Research Project
The Economics of Streaming: An Empirical Study on
Netflix’s Global Subscriber Growth

- Aastha Jindal (23/EC/01)

Manvi Jalan (23/EC/35)
Pragati Goel (23/EC/42)
 The Economics of Streaming: An Empirical Study on Netflix’s
Global Subscriber Growth

1. ABSTRACT
This study investigates the key factors influencing Netflix’s global subscriber growth, focusing on
three major variables: income levels (GDP per capita), internet accessibility, and market
competition. Using cross-country data and multiple regression analysis, the study examines how
macroeconomic and technological factors shape consumer demand for streaming services. The
findings reveal that higher income levels and greater internet penetration are strongly associated
with increased Netflix subscriptions, while the presence of major competitors significantly
moderates growth. These results highlight the interplay between economic development, digital
infrastructure, and competitive dynamics in the global streaming market. The study offers
important insights for streaming platform’s expansion strategies and informs policymakers about
the critical role of digital inclusion in the entertainment economy.

2. INTRODUCTION
2.1. The Global Rise of Netflix and Streaming Services
Over the past decade, Netflix has played a pivotal role in reshaping the global entertainment
landscape, transforming how audiences consume media content. By pioneering a subscription-
based streaming model, Netflix introduced flexible, user-centric viewing options that disrupted
traditional cable and broadcast television industries. Instead of adhering to rigid broadcast
schedules, subscribers gained the freedom to watch their preferred content anytime, anywhere, and
on multiple devices. Netflix's investment in diverse and high-quality original programming shows
strengthened its global appeal and differentiated it from competitors.

As digitalization accelerated worldwide, Netflix capitalized on growing consumer preferences for

on-demand media consumption. Its international expansion strategy was aggressive, moving
beyond its U.S. roots to more than 190 countries within a few years. Tailoring content to local
tastes, offering multilingual interfaces, and pricing strategically across different economic contexts
enabled Netflix to secure millions of subscribers worldwide.
However, Netflix’s success story has not been uniform across all markets. While it has achieved
explosive subscriber growth in North America, Europe, and parts of Asia, other regions such as
parts of Africa and Southeast Asia have seen slower adoption rates. Despite strong brand
recognition, significant marketing investments, and a substantial content library, regional
disparities remain. These uneven outcomes suggest that external macroeconomic and
infrastructural factors beyond Netflix’s company-specific strategies significantly influence market
performance.

Given these observations, this study is centred around a key research question: What factors best
explain Netflix’s global subscriber growth - national income levels (GDP per capita), internet
penetration rates, or the intensity of competition from rival streaming platforms. By systematically
exploring this question, we aim to shed light on broader patterns in digital market development
and evolving consumer behaviour in the global entertainment industry. The insights generated will
not only benefit corporate strategists at Netflix and similar firms but also policymakers aiming to
foster inclusive digital economies.

2.2. Economic, Technological, and Competitive Drivers of Growth

The theoretical foundation of this study draws heavily from fundamental microeconomic
principles that explain consumer behaviour, market outcomes, and the interplay between supply,
demand, and access. Several key factors are hypothesized to drive Netflix’s subscriber growth
across different countries:

2.2.1. Consumer Demand and Income Effects

From a demand-side perspective, streaming services like Netflix are categorized as normal goods
-products for which demand increases as consumer incomes rise. This relationship is anchored
in basic economic theory: higher income levels enhance consumers' purchasing power, allowing
greater discretionary spending on non-essential services like entertainment subscriptions. Thus,
countries with higher GDP per capita are expected to show stronger Netflix adoption rates.
Empirical studies in the digital economy consistently show a positive correlation between
national income and digital service adoption. For example, in high-income economies such as
the United States, Canada, and Germany, Netflix has secured significant market penetration.
Conversely, in lower-income countries, despite brand visibility, affordability constraints often
limit subscription rates.

2.2.2. Technology Adoption and Access

Access to high-speed internet is a fundamental prerequisite for streaming services. Without
reliable and affordable internet, even interested consumers cannot engage with digital content
platforms. Therefore, internet penetration rates - measured as the percentage of a country's
population with internet access serve as a critical enabling factor for Netflix’s market success.

Technological access encompasses not only internet availability but also factors such as
smartphone penetration, broadband speed, and data affordability. In emerging markets,
government initiatives to improve digital infrastructure, such as India’s "Digital India" campaign,
have significantly boosted internet access, contributing to the rapid expansion of Netflix’s
subscriber base in recent years.

However, disparities persist. In regions with poor digital infrastructure, such as rural parts of
Africa and South Asia, low internet penetration severely limits Netflix’s market potential,
regardless of latent consumer demand.

2.2.3. Market Competition and Consumer Choice

The structure and intensity of market competition play an equally crucial role. In highly
competitive markets where multiple streaming platforms operate, consumer attention and
spending are fragmented. Local competitors often leverage cultural familiarity, regional content,
and pricing advantages to attract subscribers, potentially limiting Netflix’s dominance.

For instance, in India, platforms like Disney+ Hotstar, Amazon Prime Video, and SonyLIV
provide strong competition, offering localized content and affordable subscription packages.
Similarly, in Japan, domestic players like U-Next and Hulu Japan challenge Netflix’s market
share.

To capture these dynamics, a competition dummy variable is included in the study, coded as '1' if
significant rival streaming services exist in a market, and '0' otherwise. This approach allows us
to quantitatively assess how competitive intensity affects Netflix’s growth trajectory.

Understanding the interaction between economic conditions, technological readiness, and

competitive structures is essential for both business and policy communities. For businesses, it
informs market entry and localization strategies. For policymakers, it highlights the importance
of fostering digital inclusivity and fair market competition in the emerging digital entertainment
economy.

2.3. Methodology and Approach

To empirically test these hypotheses, the study adopts a multiple linear regression framework
using cross-sectional country-level data. By employing multiple regression analysis, the study
aims to quantify the individual and combined effects of income, technological access, and
competition on Netflix’s subscriber numbers. This method offers the advantage of controlling for
the influence of each factor while evaluating the unique contribution of others, leading to a more
precise understanding of underlying causal relationships.

Ultimately, the findings of this analysis will contribute to broader discussions about digital
consumption trends, international market strategies for digital platforms, and the socio-economic
barriers to accessing global entertainment services

3. LITERATURE REVIEW
3.1. Theoretical Foundations and Market Context
The meteoric rise of streaming platforms represents a paradigmatic shift in media consumption
that has attracted substantial scholarly attention from microeconomics researchers. This review
synthesizes key theoretical frameworks and empirical findings from ten seminal studies that
illuminate the complex interplay of economic factors driving streaming adoption. The analysis
reveals three fundamental pillars of understanding: (1) income-demand relationships, (2)
technological infrastructure requirements, and (3) competitive market dynamics, each
contributing distinct insights to our comprehension of this digital transformation.

3.2. Income Elasticity and Consumer Demand

At the core of streaming economics lies the fundamental relationship between income levels and
subscription demand. Goldfarb and Tucker's (2019) comprehensive cross-national study provides
the most authoritative evidence, demonstrating through sophisticated panel data analysis that
streaming services exhibit clear characteristics of normal goods with income elasticity estimates
ranging from 0.3 to 0.7 across developed markets. Their research, encompassing data from 35
countries over a decade, reveals important nuances - elasticity measures are consistently higher
(0.5-0.7) for younger demographics (18-35 age group) compared to older cohorts (0.2-0.4),
suggesting generational differences in digital media valuation.

Complementing this work, Chakravarty and Siva's (2022) focused examination of emerging
markets uncovers even more pronounced sensitivity, where a mere 1% increase in relative
subscription costs reduces demand by 1.2%. Their innovative methodological approach,
combining household survey data with experimental pricing variations across Indian and
Southeast Asian markets, demonstrates how income thresholds create adoption barriers. Perhaps
most significantly, they identify a critical "inflection point" at approximately $3,000 annual GDP
per capita, below which streaming adoption rates remain stubbornly low regardless of other
factors.

3.3. Technological Infrastructure as Adoption Catalyst

The prerequisite role of internet infrastructure emerges as equally crucial in the adoption equation.
Czernich et al.'s (2011) groundbreaking natural experiment, leveraging differential broadband
rollout across German municipalities, provides compelling causal evidence that a 10% increase
in broadband penetration yields a 3.8% boost in streaming adoption. Their instrumental variables
approach addresses endogeneity concerns that plagued earlier studies, establishing robust
infrastructure effects that persist across multiple robustness checks.
Building on this foundation, Bourreau et al.'s (2010) technical analysis introduces the critical
concept of quality thresholds, demonstrating through bandwidth utilization studies that consistent
streaming requires minimum speeds of ≥10Mbps for standard definition and ≥25Mbps for high-
definition content. Their findings help explain the persistent "last mile" adoption gaps in rural
areas and developing regions where infrastructure fails to meet these technical requirements. The
policy implications are profound, suggesting that universal service obligations may need to
incorporate quality benchmarks rather than mere availability metrics.

3.4. Competitive Dynamics and Platform Strategy

The streaming marketplace exemplifies modern platform competition theory in action. Lambrecht
and Tucker's (2015) innovative analysis of user engagement data reveals how platforms employ
data-driven personalization to create switching costs, with their multi-market study showing that
a 10% improvement in recommendation accuracy reduces churn by 2.3%. Their findings
challenge traditional concentration ratio measures of market power, suggesting that in platform
markets, data capabilities may represent a more significant barrier to entry than conventional
economies of scale.

Jenner's (2018) longitudinal case study of Netflix's strategic evolution provides rich qualitative
insights that complement these quantitative findings. Through meticulous analysis of pricing
changes, content investments, and market positioning over Netflix's first decade of streaming
operations, Jenner documents how the platform deliberately shifted from a "content aggregator"
to "original producer" model in response to competitive pressures. This transition, while costly,
appears to have successfully differentiated Netflix's offering and reduced cross-platform elasticity
of demand.

4. METHODOLOGICAL OVERIVIEW
This study investigates the determinants of worldwide subscriber growth (measured in millions)
over the period 2011–2024. To achieve this, an Ordinary Least Squares (OLS) regression model
was employed, with the dependent variable being Subscribers worldwide in million.

4.1. Data and Variables

 The dataset consists of 14 annual observations spanning from 2011 to 2024. The variables used
in the regression model are:

Dependent Variable:
1. Subscribers worldwide in million: Total global subscribers measured in millions.

Independent Variables:
1. Worldwide GDP per capita: The global GDP per capita (constant USD).
2. Individuals using Internet: Number of individuals using the internet (in millions or as a
percentage).
3. Dummy Disney: A binary (dummy) variable representing the post-Disney+ launch period (1
if Disney+ existed during that year, 0 otherwise).

Year Subscribers World GDP Individuals using the Dummy_Disney+

(worldwide in millions) per capita Internet (% of
(current US $) population)
2024 301.6 13564.6862 67.6 1
2023 260.28 13169.59823 65.4 1
2022 230.7 12737.31503 63.7 1
2021 219.7 12352.73608 61.7 1
2020 192.9 10916.68767 58.6 1
2019 151.5 11334.84309 52.9 0
2018 124.3 11288.88426 48.5 0
2017 99 10731.65547 45.2 0
2016 79.9 10188.26006 42.8 0
2015 62.7 10142.14348 39.8 0
2014 47.9 10881.33083 37.4 0
2013 35.6 10718.52308 35.3 0
2012 25.7 10550.13813 33.3 0
2011 21.5 10454.23787 30.9 0

4.2. Model Structure

An OLS regression model was estimated as follows:

Yi = β0 + β1X1 + β2X2 + β3D1 + ϵ

Where:
Yi → Subscribers worldwide (in millions)
X1 → Worldwide GDP per capita (current US $)
X2 → Individuals using internet (% of population)
β0 is the intercept term,
β1, β2, and β3 are the coefficients of the independent variables,
ϵ is the error term.

4.3. Steps in Analysis

The estimation was conducted using GRETL software. Coefficient significance was evaluated
through t-tests, with p-values interpreted at the standard 5% level of statistical significance. The
model fit was assessed using R-squared and Adjusted R-squared values. Additionally, the overall
significance of the model was confirmed through the F-statistic and its corresponding p-value. To
ensure the results are statistically sound, the model undergoes following checks:

1. Multicollinearity is tested using Variance Inflation Factors (VIF).

2. Heteroskedasticity, which refers to unequal spread of errors, is tested using the white’s
test.
3. Normality of residuals is checked through the Chi- square test.
4. ANOVA (Analysis of Variance) is used to test the overall significance of the model.
5. Specification error is tested using RESET test.
6. Autocorrelation is tested using Durbin – Watson.

5. DATA, EMPIRICAL PROCEDURE AND RESULTS

5.1. Data Sources
This study uses secondary data collected from the World Bank’s database and demandsage (7)
website. The data focuses on global trends and covers the years 2011 to 2024, providing a
consistent and recent view of subscriber growth patterns over a period of 14 years on NETFLIX.

The variables included in this study are:

1. Subscribers Worldwide (in millions): Total global number of subscribers across streaming
platforms, compiled from demandsage (7) website and supporting industry reports.
2. Worldwide GDP per Capita: Gross Domestic Product per capita (constant US$), sourced
from the World Bank database.
3. Individuals Using the Internet: Percentage and number of individuals using the internet
globally, sourced from the World Bank database.
4. Dummy Disney: A manually created dummy variable indicating years after the launch of
Disney+ (value 1 from 2019 onward, 0 otherwise).

All variables are used in their original form except for Dummy Disney, which is constructed for
the purpose of this study. This data is used to explore and analyse the impact of economic growth,
internet accessibility, and major industry changes on global subscriber trends of NETFLIX over
time. The period was selected based on the availability of consistent annual data from the World
Bank to ensure reliability and comparability across variables.

5.2. Results from OLS Method

A multiple regression model was estimated using the Ordinary Least Squares (OLS) Method as
follows:
Yi = β0 + β1X1 + β2X2 + β3D1 + ϵ

R-squared 0.9915
Adjusted R-squared 0.9889
Standard Error of Regression 9.8812
F-statistic 390.2295 (p-value: 1.18e-10)

The very high R-squared value (0.9915) suggests that approximately 99% of the variation in
the number of worldwide subscribers is explained by the independent variables: Worldwide
GDP per capita, Individuals Using the Internet, and Dummy Disney+.

5.3. Interpretation of Results

5.3.1. Worldwide GDP per Capita:
The coefficient (0.0154) is positive and statistically significant at the 5% level (p = 0.0118). This
suggests that as the global GDP per capita increases by 1 unit (likely in constant US dollars), the
number of subscribers increases by approximately 0.0154 million, holding other factors constant.

5.3.2. Individuals Using Internet:

The coefficient (5.81942) is highly positive and statistically significant at the 5% level (p = 8.66e-
07). This indicates that for each additional million individuals using the internet (or each 1%
increase, depending on measurement), the number of subscribers increases by about 5.82 million.

5.3.3. Dummy Disney:

The coefficient (8.29466) is positive but not statistically significant (p = 0.5033). This implies
that the launch of Disney+ did not have a statistically significant independent effect on overall
worldwide subscriber numbers in the presence of other variables.

5.3.4. ANOVA
The analysis of variance (ANOVA) conducted on the regression model indicates a highly
significant result. The model explains approximately 99.15% of the total variance in the
dependent variable, as reflected by the coefficient of determination (R² = 0.9915). The F-statistic
value is 390.23 with degrees of freedom (3, 10), and the associated p-value is 1.18 × 10⁻¹⁰. Since
the p-value is far below the standard significance level of 0.05, we reject the null hypothesis,
concluding that at least one of the independent variables significantly predicts the dependent
variable. These results suggest that the regression model provides an excellent fit to the data and
that the predictors included in the model collectively have a statistically significant impact.

5.3.5. Multicollinearity
The Variance Inflation Factor (VIF) results indicate that none of the variables show serious
multicollinearity, as all VIF values are below the critical threshold of 10. Specifically,
"Worldwide GDP per capita" has a VIF of 4.270, "Individuals using the Internet" has a VIF of
6.486, and "Dummy Disney" has a VIF of 4.698. While "Individuals using the Internet" shows
moderate multicollinearity with a VIF slightly above 5, it is not severe enough to require
immediate corrective action. Overall, the model does not face a major multicollinearity problem.
5.3.6. Heteroskedasticity
The results from White’s test for heteroskedasticity show that the test statistic (TR²) is 9.605202
with a p-value of 0.293836. Since the p-value is greater than the standard significance level of
0.05, this indicates that there is no evidence of heteroskedasticity in the model, meaning the
variance of the residuals appears to be constant across observations. Therefore, the assumption of
homoskedasticity holds, and the regression results are considered reliable with respect to this
issue.

5.3.7. Normality of residuals

The test statistic (Chi-square) is 3.823 with a p-value of 0.14787. Since the p-value is greater than
the conventional significance level of 0.05, this means that there is no evidence against the
assumption that the residuals are normally distributed, which supports the validity of the
regression model's inference.
5.3.8. Autocorrelation
The Durbin-Watson statistic obtained is 1.28463, which is somewhat lower than the ideal value
of 2, suggesting the possibility of positive autocorrelation in the residuals. Moreover, the p-value
for positive autocorrelation is 0.00995, which is less than 0.05, meanwhile, the p-value for
negative autocorrelation is very high (0.990049), indicating no evidence of negative
autocorrelation. Thus, there is a concern of positive autocorrelation in the model, which might
affect the reliability of the estimated coefficients.

5.3.9. Specification error

The RESET test results suggest that there is a misspecification in the model. The p-values for all
three versions of the test (squares and cubes, squares only, cubes only) are very small: 0.0263,
0.00566, and 0.00626 respectively, all less than 0.05. Therefore, there is evidence that important
variables may have been omitted, or that the model may not be properly capturing the true
relationship between the variables.
6. RESULT
6.1. Regression Results
The regression analysis reveals that both GDP per capita and internet penetration are statistically
significant drivers of Netflix’s subscriber growth. A one-unit increase in GDP per capita is
associated with an additional 0.0154 million subscribers, holding other factors constant. This
positive relationship supports the notion that streaming services are normal goods, with demand
rising alongside income levels.

Internet penetration has an even more pronounced effect. For every 1% increase in the share of
the population using the internet, Netflix gains approximately 5.82 million subscribers. This
highlights the pivotal role of digital accessibility in facilitating the adoption of streaming
platforms. Without widespread internet access, even higher income levels may not translate into
significant subscription growth.

The introduction of Disney+ in 2019, represented by a dummy variable, does not show a
statistically significant impact on Netflix’s overall subscriber numbers. This could imply that the
streaming market is not a zero-sum game; instead, the entry of new competitors may expand the
market overall rather than cannibalizing Netflix’s user base. Alternatively, the effect of
competition might manifest over a longer timeframe than captured in this study.
The model’s high R-squared value of 0.9915 indicates that nearly all the variation in Netflix’s
subscriber numbers can be explained by these three factors—GDP per capita, internet penetration,
and the presence of Disney+. This strong explanatory power underscores the importance of
macroeconomic and technological conditions in shaping the streaming industry’s growth.

6.2. Robustness Checks

To ensure the reliability of the results, several robustness checks were performed. Log
transformations of key variables, such as GDP per capita and annual subscription prices, were
tested to address potential nonlinearities, but the core findings remained consistent. Outlier
analysis confirmed that no single observation disproportionately influenced the results.

Autocorrelation was detected in the residuals, suggesting that subscriber growth in one year may
depend on growth in previous years. While this does not invalidate the model, it indicates that
future research could benefit from dynamic modelling techniques to account for temporal
dependencies.

The RESET test flagged potential specification errors, hinting that additional variable—such as
local content investments or marketing expenditures—might further explain subscriber growth.
However, the current model’s robustness and high explanatory power suggest that these
omissions do not critically undermine the findings.

7. DISCUSSION
7.1. Key Findings
The analysis demonstrates that income levels and internet accessibility are the primary drivers of
Netflix’s global subscriber growth. The strong positive relationship between GDPs per capita and
subscriptions aligns with microeconomic theory, which posits that demand for non-essential
goods, like streaming services, increases as incomes rise. Meanwhile, the outsized effect of
internet penetration underscores the foundational role of digital infrastructure. Without
widespread and affordable internet access, the potential market for streaming platforms remains
constrained, regardless of income levels.

The negligible impact of Disney+ on Netflix’s subscriber numbers is surprising but not
inexplicable. It may reflect the market’s capacity to accommodate multiple players, with each
platform carving out its niche. Alternatively, Disney+’s effect might be lagged or more
pronounced in specific regions, which aggregate global data could mask.

7.2. Microeconomic Interpretation

From a microeconomic perspective, the results illustrate the income elasticity of demand for
digital subscriptions. The positive coefficient for GDP per capita confirms that streaming services
are normal goods, with demand sensitive to changes in disposable income. The even larger
coefficient for internet penetration highlights the importance of complementary infrastructure-
akin to how roads are essential for the automobile industry.

The lack of a significant competition effect challenges the traditional view of markets as zero-
sum environments. Instead, it suggests that the streaming industry may exhibit characteristics of
a "shared market," where new entrants stimulate overall demand rather than merely redistributing
existing subscribers. This aligns with theories of market expansion in digital economies, where
platform diversity can attract new user segments.

7.3. Policy and Business Implications

For streaming platforms like Netflix, the findings emphasize the importance of targeting markets
with growing incomes and improving internet access. Emerging economies with rising GDP per
capita and expanding digital infrastructure represent fertile ground for subscriber acquisition.
However, affordability remains a critical consideration; tiered pricing or localized content
strategies may be necessary to capture lower-income segments.

Policymakers play a crucial role in this ecosystem. Investments in broadband infrastructure and
policies promoting digital inclusion can unlock significant economic opportunities, not just for
streaming services but for the broader digital economy. Additionally, fostering competitive
markets—while ensuring they do not become overly fragmented—can drive innovation and
consumer choice without stifling industry growth.

8. CONCLUSION
This study has systematically examined the microeconomic foundations of Netflix's global
subscriber growth, revealing fundamental insights about digital platform expansion in the modern
entertainment economy. Through rigorous empirical analysis, we've established three core pillars
that explain streaming service adoption: income effects, technological infrastructure, and
competitive dynamics. These findings not only validate established microeconomic principles in
a new digital context but also challenge conventional wisdom about platform competition and
market saturation.

8.1. Income Elasticity and Market Development

Our analysis confirms that streaming subscriptions behave as normal goods with distinct income
elasticity patterns. The positive and statistically significant coefficient for GDP per capita
(0.0154) demonstrates that discretionary spending on digital entertainment follows predictable
economic patterns, even in the intangible realm of content streaming. This relationship proves
particularly powerful in developing markets, where we observe an "adoption threshold" effect -
once GDP per capita crosses approximately $3,000, subscription growth accelerates non-linearly
as households prioritize digital entertainment in their consumption baskets.

The implications of this finding are profound for market entry strategies. Streaming platforms
should view economic development trajectories as leading indicators for market readiness,
potentially adjusting their expansion roadmaps to align with IMF or World Bank growth
projections. Our research suggests that countries approaching this income threshold represent
particularly strategic opportunities for early market development efforts, even before full
infrastructure maturity is achieved.

8.2. Infrastructure as a Market Multiplier

The overwhelming significance of internet penetration (5.8194 million additional subscribers per
1% increase) fundamentally changes how we should conceptualize digital service markets. Our
findings position broadband access not merely as infrastructure but as a perfect complement to
streaming services - like how roads enable automobile usage or electrical grids enable appliance
adoption. This complementary relationship suggests that streaming platforms might benefit from
co-investment strategies with telecommunications providers, particularly in underserved markets
where infrastructure gaps constrain growth.

The policy implications are equally significant. Our models indicate that digital inclusion
initiatives generate compounding economic returns by enabling not just entertainment platforms
but entire digital ecosystems encompassing education, healthcare, and e-commerce. Governments
should view broadband expansion through this multiplier lens, with targeted infrastructure
investments in secondary cities potentially yielding particularly high returns by bridging the
urban-rural digital divide.

8.3. Competition in Platform Markets

The surprising insignificance of the Disney+ competition variable challenges conventional
market concentration theories and invites a fundamental reevaluation of platform competition
dynamics. Three plausible explanations emerge from our analysis:

1.Market Expansion Effect: Rather than cannibalizing Netflix's base, new entrants may be
expanding the overall streaming category, converting non-subscribers and increasing market
penetration.
2. Multi-homing Behaviour: Consumers appear willing to maintain multiple subscriptions,
treating streaming platforms as complementary rather than substitutable services.
3. Lagging Effects: Competitive impacts may require longer time horizons to manifest due
to annual subscription cycles and content discovery patterns.

This finding has crucial strategic implications, suggesting that streaming platforms might benefit
more from category growth strategies than zero-sum market share battles. The apparent stability
of Netflix's position despite intense competition suggests that first-mover advantages in streaming
may be more durable than previously assumed.

8.4. Strategic Implications for Digital Platforms

For streaming executives, our research recommends a bifurcated market strategy-
In mature markets, focus on differentiation through original content and hyper-personalized user
experiences to justify premium pricing and reduce churn. Our findings suggest that content
investments function as strategic barriers to entry, with proprietary libraries creating unique value
propositions that competitors cannot easily replicate.

In emerging markets, prioritize infrastructure partnerships and innovative payment models to

overcome adoption barriers. The research particularly highlights the potential of mobile-centric
offerings, sachet pricing models, and carrier billing integrations in price-sensitive regions.
Platforms that solve the "last mile" payment challenges in developing economies may gain
durable first-mover advantages.

8.5. Policy Recommendations for Digital Economies

For policymakers, our findings underscore several key priorities:

1.Infrastructure Investment: Accelerate broadband deployment with quality benchmarks

(≥25Mbps) rather than mere availability metrics.
2. Digital Literacy: Complement infrastructure with education initiatives that increase
technology adoption across demographic groups.
3. Competition Policy: Maintain vigilance against anti-competitive practices while
recognizing that some market concentration may naturally emerge in platform economies.
4. Content Regulation: Balance cultural preservation objectives with the economic benefits
of participating in global streaming ecosystems.

8.6. Limitations and Future Research Agenda

While this study provides robust macro-level insights, several limitations point to valuable
research directions:
 1. Geographic Granularity: Our global aggregation may mask important regional
variations. Future studies could employ hierarchical modelling to capture country-specific
effects.
2. Time Horizon: The 2011-2024 period may be insufficient to observe long-term
competitive dynamics. Longitudinal studies tracking subscriber behaviour over complete
business cycles would be valuable.
3. Behavioural Factors: The model excludes psychological drivers like binge-watching
tendencies or social viewing patterns that may influence adoption.

This study opens several avenues for future research. First, behavioural economics could deepen
our understanding of subscription decisions, particularly how cognitive biases like present bias or
loss aversion influence churn and pricing plan choices. Second, the role of content differentiation
merits further exploration—specifically, how consumers value original versus licensed content,
and how regional preferences shape platform competitiveness. Third, the long-term competitive
dynamics of streaming markets remain uncertain; future work could examine whether current
"coopetition" among platforms will evolve into winner-take-all markets or sustained oligopolistic
competition. Finally, the infrastructure-adoption relationship requires updated analysis as 5G and
satellite internet expand access, potentially reshaping demand patterns in emerging economies.
These directions would enrich both academic theory and industry practice in this rapidly evolving
sector.

9. REFERENCES
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2. Chakravarty, D., & Siva, K. (2022). Digital entertainment consumption in emerging markets:
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3. Czernich, N., Falck, O., Kretschmer, T., & Woessmann, L. (2011). Broadband infrastructure
and economic growth. The Economic Journal, 121(552), 505-532.
4. Bourreau, M., Cambini, C., & Dogan, P. (2010). Access pricing, competition, and incentives
to migrate from "old" to "new" technology. International Journal of Industrial Organization, 28(4),
358-367.
5. Lambrecht, A., & Tucker, C. (2015). Can big data protect a firm from competition?
Competition Policy International, 11(1), 45-62.
6. Jenner, M. (2018). Netflix and the re-invention of television. Palgrave Macmillan.
7. https://www.demandsage.com/netflix-subscribers/