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• W3217147372 abstract "Are audiovisual over the top (OTT) services in Latin America substitutes for the traditional Pay TV services (cable or satellite), complementary or independent? To respond to this question, we develop a simple theoretical model based on a CES utility function and estimate simultaneously, using non-linear least squares, demand functions for both audiovisual services. Our results, based on original database covering 17 Latin American countries from 2011 to 2020, suggest no substitution of Pay TV for OTT. However, during the more recent period (2015–2020), we find evidence of gross substitution (i.e., similar enough, although not completely equivalent for consumers) between these audiovisual services. This confirms, although only partially, the existence of the so-called cord-cutting and cord-saving phenomena, due to the expansion of fast internet and the richer OTT offers, and their relatively lower prices. These results suggest regulators should include OTT services in their scope and produce in-depth analysis on the country level to update and optimize regulations, as well as implement regulatory sandboxes to advance towards smart regulation, as shown in the financial industry. • The purpose of this paper is to study if audiovisual over the top (OTT) services in Latin America are substitutes for the traditional Pay TV services (cable or satellite). • This is a crucial question from a policy perspective, as if found to be substitutes, audiovisual regulators should consider them both as competitors in the same relevant market, and as a result, similar regulations should apply to both to avoid distortive asymmetries and enhance the healthy competition. • We develop a simple theoretical model based on a CES utility function and estimate simultaneously, using non-linear least squares, demand functions for both audiovisual services. • Our results, based on original database covering 17 Latin American countries, suggest no substitution of Pay TV for OTT when we consider the complete period of the database, from 2011 to 2020. However, if we replicate the estimations for a shorter and more recent period (2015–2020), we find evidence of gross substitution between these audiovisual services. • This confirms, although only partially, the existence of the so-called cord-cutting and cord-saving phenomena, due to the expansion of fast internet and the richer OTT offers, and their relatively lower prices. • These results are robust to the addition of several control variables that are expected to influence adoption decisions according to the specialized literature. • However, considering that the link found is of gross substitutes (not perfect), we cautiously recommend further analysis on the country level before extrapolating decisions on OTT services regulation." @default.
• W3217147372 created "2021-12-06" @default.
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• W3217147372 date "2023-02-01" @default.
• W3217147372 modified "2023-10-14" @default.
• W3217147372 title "Is your netflix a substitute for your telefunken? Evidence on the dynamics of traditional pay TV and OTT in Latin America" @default.
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• W3217147372 doi "https://doi.org/10.1016/j.telpol.2022.102397" @default.
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