4 ms·

Bundling is actually win-win in practice. The economics work pretty well, which is why it's so persistent. It's a bit complex, take a look: http://cdixon.org/2

Bundling is actually win-win in practice. The economics work pretty well, which is why it's so persistent. It's a bit complex, take a look: http://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers/ http://cdixon.org/2012/07/08/how-bundling-benefits-sellers-a...

jimhefferon 10y ago
Bundling results in me having to pay Fox "news." That's a lose.
croon 10y ago
It's only a win-win if in aggregate, people put a value on everything that is bundled. By that I mean that enough singular people put a value on a large subset of all channels. If too many people put a value 0 on too many bundled items, it's most definitely a consumer loss. The author admits this, but claims that collectively it is a win. There's no basis provided for this assumption though, other than that it is the market. I have no problem believing the cable market is flawed though (local monopolies). This is anecdata, but if true hits the core: Traditionally people I know always bought (happy meal or) big mac/quarterpounder & co (this could be inaccurate dollars, because it's not the local currency) for $6, because the sandwich was $4 a la carte, and the fries an additional $2. So sure, even if my value on soda was as low as $0.1 I would still make out ahead. But then the previously unavailable double cheeseburger arrived, which had as much meat and tasted about the same as a quarterpounder, for $2. And the Big Mac sandwich occassionally sold for $2.5. And me who genuinelly always put a negative value on soda (really, I did however trade it for a smaller milkshake) and always drink water, would now instead save 67% since I generally could do without the fries as well. I'm sure I'm an aberration in wanting just a double cheeseburger with water, but I'm not so sure I'm an aberration in getting a raw deal out of bundling. The analogy with a buffét is interesting in both its similarities and its differences. People eat different amounts, sure, but there is a finite amount one could eat, and it's not everything at the buffét. Some will eat more expensive stuff (HBO, ESPN), and some will eat cheaper stuff, but the cost to the restaurant is a finite amount of food. The analogy fails when in bundling TV it would be like sending every buffét customer 10 full dishes, of which they can only eat 1-2 full ones. Another issue is viewer count and measurement. In traditional TV you've got the Nielsen box and all its flaws, as well as scheduled TV giving a LOT of power to broadcasters to dictate popularity by air time (and ads). When I pay for a Netflix bundle, in aggregate with every other customer, our money is directly mapped to exactly what shows we watch, and while they can try to push some shows, they have a lot less power in dictating what people watch. This means that shows no one wants no one pays for, because they will simply not produce it. In traditional TV this was different for a myriad of reasons, including less consumer choice in the bundle (you choose a channel, not a program), no control over air times, etc. TL;DR: I don't disagree with the economics/maths in that link, but I disagree with the premise of the input consumer value, and available choices.
taneq 10y ago
It's only a win for the consumer if the shows they're interested in are subsidized enough by others being forced to pay for them that it offsets the amount that the consumer is forced to pay for the shows they're not interested in. Basically it's a zero-sum game for the consumers amongst themselves while being a win for the seller.

jimhefferon 10y ago

Bundling results in me having to pay Fox "news." That's a lose.

croon 10y ago

It's only a win-win if in aggregate, people put a value on everything that is bundled. By that I mean that enough singular people put a value on a large subset of all channels. If too many people put a value 0 on too many bundled items, it's most definitely a consumer loss. The author admits this, but claims that collectively it is a win. There's no basis provided for this assumption though, other than that it is the market. I have no problem believing the cable market is flawed though (local monopolies). This is anecdata, but if true hits the core: Traditionally people I know always bought (happy meal or) big mac/quarterpounder & co (this could be inaccurate dollars, because it's not the local currency) for $6, because the sandwich was $4 a la carte, and the fries an additional $2. So sure, even if my value on soda was as low as $0.1 I would still make out ahead. But then the previously unavailable double cheeseburger arrived, which had as much meat and tasted about the same as a quarterpounder, for $2. And the Big Mac sandwich occassionally sold for $2.5. And me who genuinelly always put a negative value on soda (really, I did however trade it for a smaller milkshake) and always drink water, would now instead save 67% since I generally could do without the fries as well. I'm sure I'm an aberration in wanting just a double cheeseburger with water, but I'm not so sure I'm an aberration in getting a raw deal out of bundling. The analogy with a buffét is interesting in both its similarities and its differences. People eat different amounts, sure, but there is a finite amount one could eat, and it's not everything at the buffét. Some will eat more expensive stuff (HBO, ESPN), and some will eat cheaper stuff, but the cost to the restaurant is a finite amount of food. The analogy fails when in bundling TV it would be like sending every buffét customer 10 full dishes, of which they can only eat 1-2 full ones. Another issue is viewer count and measurement. In traditional TV you've got the Nielsen box and all its flaws, as well as scheduled TV giving a LOT of power to broadcasters to dictate popularity by air time (and ads). When I pay for a Netflix bundle, in aggregate with every other customer, our money is directly mapped to exactly what shows we watch, and while they can try to push some shows, they have a lot less power in dictating what people watch. This means that shows no one wants no one pays for, because they will simply not produce it. In traditional TV this was different for a myriad of reasons, including less consumer choice in the bundle (you choose a channel, not a program), no control over air times, etc. TL;DR: I don't disagree with the economics/maths in that link, but I disagree with the premise of the input consumer value, and available choices.

taneq 10y ago

It's only a win for the consumer if the shows they're interested in are subsidized enough by others being forced to pay for them that it offsets the amount that the consumer is forced to pay for the shows they're not interested in. Basically it's a zero-sum game for the consumers amongst themselves while being a win for the seller.