New on Netflix: Streaming and the Reallocation of Cultural Trade

Abstract

Streaming platforms have transformed the distribution of audiovisual media, but their effects on related economic activity remain unclear. This paper studies whether the international expansion of Netflix affected patterns of cultural trade. I combine bilateral trade data from UN Comtrade with data on the country-of-origin composition of Netflix catalogs and exploit the staggered rollout of Netflix across European and Asian markets between 2012 and 2015. The empirical strategy uses a difference-in-differences framework that compares changes in import shares across partner countries with different levels of representation in the Netflix catalog. The results show that partners with larger Netflix catalog representation experience declines in their share of cultural imports after Netflix launches in treated markets. A 1 percentage point increase in catalog representation is associated with a 0.04 percentage point reduction in cultural import share. The effect is concentrated in cultural goods such as optical media, books, or artworks, while estimates for spillover and placebo goods are generally smaller and statistically insignificant. A 1 percentage point increase in a partner’s gap between Netflix catalog representation and pre-launch box office representation is associated with a 0.07 percentage point reduction in cultural import share, though only for partners underrepresented on Netflix relative to cinemas in the pre-period; the effect is insignificant for overrepresented partners. Event study estimates show no evidence of differential pre-trends and indicate that the decline emerges gradually after platform entry. These results are consistent with a substitution effect in which streaming availability displaces some physical cultural imports from countries whose media content was already widely distributed internationally prior to the expansion of streaming platforms.