The Relationship of Online Netflix User Reviews to Days to Sale for New Dvds on Amazon

INTRODUCTION The substantial growth of the Internet has caused profound changes in the global economy. Research on its impact on national economies shows that Internet sales are beginning to make up a notable percent of GDP, especially in countries where consumers and corporations are heavy users (Hazan et. al, 2011). It has also had a tremendous impact on consumer purchase of collectible cultural goods such as books. Books once were sold in a local competitive landscape. Due to the ubiquity of the Internet, however, they now must compete globally (Raugust, 1999). Rare books, for example, are no longer solely sold in small Antiquarian book stores. Buyers can now purchase rare books from such global sites as Biblio (http://www.biblio.com), AbeBooks (https://www.abebooks.com), and Alibris (http://www.alibris.com/). The Internet has also impacted the sale of new books. While used college texts have, for example, always negatively impacted the sale of new texts, Internet sale and purchase of used books from students have increased this negative impact well beyond prior levels. No longer do new books of any kind have a long period of time before their sale is eroded by used books. As remarkable as it may seem, books are available as used books almost immediately after their release, with used editions appearing on Amazon often only one day after the new book goes on sale (Mutter et al., 2004). Similar to books, a DVD is also capable of being a collectible and is not perishable. And the sale of DVDs has followed a similar course to that of books sold on the Internet. The majority of DVD sales moved from local distribution by retailers to global regional sales linked to the ability of a DVD to play in given regions of the world, designated by their region codes (e.g., 1 = U.S. and Canada, 6 = China). As a digital product, the DVD film market has a short product life cycle; with considerable novelty value at the beginning, followed by a brief maturity phase and a rapid decline as new films supersede old ones. Studios have attempted to retain consumer interest through the release of Blu-rays and the release of popular films as special editions with some success, though the cost of restoration can be as high as $1 million dollars (Schauer, 2012). Also, there are still things that can be obtained on a DVD that can't be found in streaming and may never be found on streaming because of the extra cost to streaming distributors, such as special features (e.g., interviews with directors and actors) (Weinman, 2012). Whether someone chooses to rent or own a DVD to get these features is a complex matter driven by price, convenience, and user preference. This short life cycle and the intense competition that takes place during it require a responsive and agile DVD inventory management process (Chung et al., 2012). One key component for the development of such a system is an understanding of how user views of DVD content relate to sales, especially online where many DVDs are now purchased. Our study seeks to answer this question by examining the impact of valence and volume of user reviews on the time it takes to sell new DVDs. Whether valence or volume matters more has remained a point of debate in current research. Reviews have long been recognized as highly influential in consumer choices in the cultural industries, ranging from performing arts festivals (Shrum, 1991) to the feature film industry (Chintagunta et al., 2010; Dellarocas et al., 2007; Duan et al., 2008; Liu, 2006), digital music industry (Shin et al., 2008) and the online book market (Chevalier & Mayzlin, 2006; Gruhl et al., 2005). However, the pathway of influence through which reviews affect market outcomes has been relatively underspecified. Since product reviews vary in terms of volume and valence, there are two possible pathways of influence of reviews on consumer choice. One perspective is that the sheer volume of reviews may serve as a proxy for popularity of products (Kovacs & Sharkey, 2014) which may encourage purchase behavior. …