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January 17, 2017 10:00 pm

Netflix is 'Killing' DVD Sales, Research Finds

Netflix has become the go-to destination for many movie and TV fans. The service is bringing in billions for copyright holders, but it also has a downside. New research shows that the availability of content on Netflix can severely hurt physical disc sales, which traditionally have been the industry's largest revenue source. From a report: A new study published by researchers from Hong Kong universities provides some empirical evidence on this issue. Through a natural experiment, they looked at the interplay between Netflix availability and DVD sales in the United States. The experiment took place when the Epix entertainment network, which distributes movies and TV-shows from major studios including Paramount and Lionsgate, left Netflix for Hulu in 2015. Since Hulu has a much smaller market share, these videos no longer reached a large part of the audience. At least not by default. The researchers used difference to examine the effect on DVD sales, while controlling for various other variables. The results, published in a paper this week, show that DVD sales increased significantly after the content was taken off Netflix, almost by a quarter. "Our difference-in-difference analyses show that the decline in the streaming availability of Epix's content leads to a 24.7% increase in their DVD sales in the three months after the event," the paper reads.

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