The Role of "Live" in Livestreaming Markets: Evidence Using Orthogonal Random Forest

Abstract

The common belief about the growing medium of livestreaming is that its value lies in its "live" component. In this paper, we leverage data from a large livestreaming platform to examine this belief. We are able to do this as this platform also allows viewers to purchase the recorded version of the livestream. We summarize the value of livestreaming content by estimating how demand responds to price before, on the day of, and after the livestream. We do this by proposing a generalized Orthogonal Random Forest framework. This framework allows us to estimate heterogeneous treatment effects in the presence of high-dimensional confounders whose relationships with the treatment policy (i.e., price) are complex but partially known. We find significant dynamics in the price elasticity of demand over the temporal distance to the scheduled livestreaming day and after. Specifically, demand gradually becomes less price sensitive over time to the livestreaming day and is inelastic on the livestreaming day. Over the post-livestream period, demand is still sensitive to price, but much less than the pre-livestream period. This indicates that the vlaue of livestreaming persists beyond the live component. Finally, we provide suggestive evidence for the likely mechanisms driving our results. These are quality uncertainty reduction for the patterns pre-and post-livestream and the potential of real-time interaction with the creator on the day of the livestream.

From Free to Paid: Monetizing a Non-Advertising-Based App

“…We adopted a machine-learning approach, generalized random forests (GRF; Wager and Athey 2018), in the framework of double machine learning (Chernozhukov et al 2017;Cong, Liu, and Manchanda 2021;Oprescu, Syrgkanis, and Wu 2019) to explore heterogeneity effects with observed variables (for detailed results, see Web Appendix C, Figure WC1). The results indicate that the younger the user, the stronger the negative effect of soft landing.…”