Introduction

Netflix is one of the most popular streaming services at the global level. The major

streaming giant has around 59 million subscribers in the US alone. At the same

time, it has managed to grow its subscriber base by almost 10% annually (Morgan,

2019). Just in 2018, the number of individuals who migrated from conventional

media sources to streaming services like Netflix, increased by 33% as per Morgan.

When it comes to the impact of Netflix, there are multiple impacts as have been

stated by individuals studying the rise of the streaming giant. On societies like the

American society, where a healthy user base of the app resides, the effects have

been even more pronounced.

The reasons have been stated by Kelson (2017) in an elaborate article. The first and

the most pronounced effect of Netflix is called ‘the Netflix effect’. This is when

individuals can’t just watch one episode of any given show that they like. Instead,

people choose to just binge through episode after episode of the given show. People

in fact, tend to lose track of the time that they are spending in front of the screen.

For a lot of individuals at the school or college level, Kelson states that ‘Netflix and

chill’ is also a common phenomenon. This means inviting an individual of the

opposite sex over for romantic sojourn while enjoying Netflix. What emerges as an

interesting aspect though, is where it is stated that a lot of individuals employ their

free time at work in watching Netflix. Essentially though, Netflix is a leisure time

activity. It is here that the trend to watch Netflix links to unemployment.

An unemployed individual is one who is without a job but is actively looking for a

job. Such an individual, would obviously have a lot of leisure time. It might be

expected then, that such an individual would spend considerable time upon the

streaming services. Here there might be a relationship between watching Netflix and

unemployment. What must be understood though, is that causality can’t be

established. What this means is that it can’t be discerned whether unemployment

directly leads to Netflix viewing. At the same time, while watching Netflix at work

might be a nuisance for a lot of employers, it can’t be stated that viewing Netflix is

actually leading to individuals being unemployed. Why then, the desire to establish

correlation?

This is because of my personal intrigue while looking at the two figures. What is

interesting is that while unemployment itself can be considered as detrimental to the

economy, the growth in revenue being generated by a streaming service can be

considered as a positive in economic terms. It is here then, that the question

emerges-

To what extent is Netflix viewing in the United States related to unemployment

rate in the United States?

If the relationship is positive, then it can be considered that streaming services like

Netflix are the last resorts of individuals who have no work available. This can then

be taken as a ready reckoner for making unemployment policies since streaming

data is much easier to gather than actual unemployment data. A negative

relationship would mean that individuals are actually using Netflix a lot more at
work. It might also project that working is actually a stressful activity and

individuals need to be relieved of their work-related stress better. This would ensure

that they don’t have to rely upon just streaming services for the sake of their

temporary stress busting. If there would be no relationship then that would mean

that the growth of streaming service is free from the unemployment impact. This

would mean that the phenomenon does not depend upon people having a lot of

leisure time.

Rationale

The rationale behind the study is that individuals tend to watch Netflix when they

do not have to work and hence have a lot of leisure time with them. If this line of

thought would be true, a correlational model can be developed between the two.

What this would do is then come up with mathematical expressions that can predict

the future direction of unemployment by looking at the data of viewership of

Netflix. This then, would make it possible to make a mathematical predictive model

for unemployment using just streaming data. Instead of multiple platforms, Netflix

is being utilised since it is the most popular streaming platform in the World as well

as the United Staes (Stoll, 2022). Hence, the correlation between the two can be

quite useful in mathematical terms.

Data Collection

The given data has been compiled for both Netflix as well as unemployment

numbers in the United States of America through 20 data points. This data is readily
available under both the heads. For the Netflix subscriber base, the pure numbers

are available even through the website of the platform. For the unemployment

related data, data has been taken up in the form of rate of unemployment in

percentage terms.

The raw data for the same has been presented in the table given below-

Table 1: Raw data related to Netflix and Unemployment Rate in the USA

(Source: Statista, 2011) (Source: Organization for Economic Co-operation and

Development, 2022)

Time Netflix subscribers in millions Unemployment Rate

Duration (USA) (USA)

Q1 (2018) 60.91 4.1215
Q2 (2018) 61.87 3.9584
Q3 (2018) 63.01 3.8142
Q4 (2018) 64.76 3.8547
Q1 (2019) 66.63 3.9053
Q2 (2019) 66.50 3.6435
Q3 (2019) 67.11 3.6914
Q4 (2019) 67.66 3.6187
Q1 (2020) 69.97 3.9121
Q2 (2020) 72.90 13.2449
Q3 (2020) 73.08 8.7486
Q4 (2020) 73.94 7.0183
Q1 (2021) 74.38 6.2171
Q2 (2021) 73.95 5.9472
 Q3 (2021) 74.02 5.1290
Q4 (2021) 75.22 4.2860
Q1 (2022) 74.58 3.9189
Q2 (2022) 73.28 3.6367
Q3 (2022) 73.39 3.6011
Q4 (2022) 74.30 3.6235

*Unemployment rates from age 15-64 years

Mathematical Tools

The first tool that can be deployed to understand the relationship between the two

variables, is a comparative chart-

Chart 1: Comparison of Netflix Subscription with Unemployment Rate

Comparison of subscription with unemployment rate

80 14

60 10.5

40 7

20 3.5

0 0
Q1 (2018) Q4 (2018) Q3 (2019) Q2 (2020) Q1 (2021) Q4 (2021) Q3 (2022)

Subcription Unemployment Rate

It can be seen that when it comes to the subscription rates of Netflix in the United

States of America, the comparison with the unemployment rate is not direct.

Deploying Excel thus, it can’t be ascertained what the relationship is. As such, it

would be more pertinent to compare the two deploying a scatter plot. A scatter plot
would be able to determine the relationship in a better manner. In this case, the

subscription can be plotted at X while the unemployment rate can be plotted at the

Y axis. This can in such a scenario, be utilised for a relationship between the two-

Scatter between subscriber and unemployment

14
y = 0.1731x - 7.1355
R² = 0.1206

10.5

3.5

0
0 20 40 60 80

The scatter plot of subscriber base with unemployment rate does not portray a

conclusive picture as it presents an R 2 value of .1206 which is indicative of weak

predictability of unemployment contingent upon the subscriber base.

A better approach to deal with the relationship between the two is to find out

Pearson’s coefficient of correlation for the two. The formula for the given

relationship is-
For a given sample which has x and y as the variables in question.

Considering the subscriber base as x and the unemployment rate as y, what is

determined is-

Key:
R value is .3472

While a positive correlation is indeed observed, this relation is not strong enough

since the value has to be closer to 1 for the same.

A next step can be to calculate the Spearman’s Rho since the Pearson’s correlation

coefficient proved to be inconclusive.

Calculation

R = CoVariance / (XRa St. Dev. * YRa St. Dev.)

Key

XRa = Ranks of X Values; YRa = Ranks of Y Values

XRa - Mx = X rank minus mean of X ranks

YRa - My = Y rank minus mean of Y ranks

Sum Diffs = (XRa - Mx) * (YRa - My)

X Ranks

Mean: 10.5

Standard Dev: 5.92

Y Ranks

Mean: 10.5

Standard Dev: 5.92

Combined

Covariance = 160 / 19 = 8.42

R = 8.42 / (5.92 * 5.92) = 0.241

Rs = 0.2406, p (2-tailed) = 0.30686

In this regard, what can be stated is that the result is not statistically significant.

Conclusion

A number of interesting deductions can be made in this regard. The first is that the

two variables do seem to be connected to each other. This is evident from the line in

the first chart. What needs to be understood though, is that the relationship does not

appear to be a linear one. This also emerges from the scatter plot which corresponds

with a curve that is J shaped and not in the form of a line or a curve that can be

directly correlated. The Pearson and Spearman coefficient both are indicative of

positive correlation, which is not strong enough to be of statistically significant.

Hence, the impact of Netflix subscription on unemployment in the USA, can’t be

verified conclusively. There might be positive growth in the two at the same time,

the causality of one linked to the other, can’t be considered.

Evaluation

There are two major aspects that might have confounded the given results and hence

have to be considered. There considerations in future studies can ensure that

conclusive results might be found out. The first is that the data is from the pandemic

period as well. This might have impacted Netflix subscription as well as

unemployment rates. The second issue is that the unemployment rates during

economic depressions also have to be considered. This is a factor that seems to have

played a role at least once during the duration being studied. More far spread and
numerous data points can be gathered for the purpose of future studies in the

domain. The causality as of now, stands unverified. Further research with more data

points using smaller age groups, regions and varying economic conditions can be

gathered for comprehensive analysis.

References

Kelson, K. (2017, December 4). Netflix and Its Impact on Society. Medium. https://

medium.com/@10805833/netflix-and-its-impact-on-

society-8357bcb96a22#:~:text=According%20to%20reports%2C%20teens

%2C%20adults%2C%20and%20even%20children

Morgan, B. (2019). What Is The Netflix Effect? Forbes. https://www.forbes.com/

sites/blakemorgan/2019/02/19/what-is-the-netflix-effect/?sh=1cd13d695640

Organization for Economic Co-operation and Development. (2022, December).

Unemployment Rate: Aged 15-64: All Persons for the United States. FRED,

Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org/series/

LRUN64TTUSQ156S

Statista. (2011). Netflix subscribers count in the U.S. | Statista. Statista; Statista.

https://www.statista.com/statistics/250937/quarterly-number-of-netflix-

streaming-subscribers-in-the-us/

Stoll, J. (2022, November 3). Most popular VOD services in the U.S. 2021. Statista.

https://www.statista.com/statistics/274192/streaming-services-penetration-

rates-in-the-us/