Is Netflix a threat to the cable TV industry? Evidence from Brazil

In recent years, the Brazilian cable TV industry has experienced a sharp downturn. In parallel, the over-the-top platform Netflix gained popularity and Brazil has become one of its biggest markets. The objective of this paper is to investigate the competitive effects of Netflix's entry on the incumbent cable TV industry. We explore the regional variability of Netflix's popularity (measured by Google Trends) and combined this information with official data of the cable TV market. Using a two-way fixed effects estimator with state-month observations (covering the period of 2012-2019), we showed that the increase in one standard deviation in Netflix popularity is associated with a 3.62% reduction in the density of cable TV subscribers and with a 19.69% reduction in the number of small firms that operate cable TV.

Automated summary

In recent years, the cable TV industry in Brazil has been declining while Netflix has become increasingly popular, making Brazil one of its largest markets. This paper investigates the impact of Netflix's entry on the competitive landscape of the cable TV industry. The study finds that the popularity of Netflix is negatively associated with the density of cable TV subscribers and the number of small cable TV firms.