Channel Bundling

Rod Fort gives an excellent argument for bundling cable channels.

Newspaper and Magazine Move to Bundling

In Industry Analysis and Managerial Economics I talk about the pros and cons of pure bundling and mixed bundling, showing that pure and mixed bundling can increase profits for the firm as a means of capturing consumer surplus - which is similar to price discrimination.  The Wall Street Journal has a nice article on just this type of product strategy for newspapers and magazines when selling their content in print and on-line.

Cable TV Pricing

In class I go over pure and mixed bundling using cable TV as an example.  Here is a NY Times article on pricing in cable TV and since the cable provider does not "a la carte" price, then this is a good application of the bundling model.  It also is showing that looking at what the consumer is willing to pay is how cable TV and in some cases cable channel content providers look at pricing their services.

Bundling Cable TV Channels

The New York Times has an article on the cost of sports channels here in the US.  While the article refers to that cost as a tax, I think of this issue more in terms of pure bundling.  In reading the article, if cable providers can use the internet to send signals to customers, then we could finally move towards a mixed bundling of cable television.

Bundling Books

The book publishing industry is going through some significant changes with the introduction of e-book reading devices and e-books. In an effort to satisfy customers that prefer the traditional method of reading a book and customers that prefer to read a book on an electronic reader some sellers are bundling both together.

As I show in class, pure bundling works as a revenue (and profit) increasing product strategy when the reservation prices between the two goods are negatively correlated. If this is the case, then pure bundling can increase the firms revenue and profits. The question remains as to whether printed books and electronic book reservation prices are negatively correlated. At first glance, I would think not, but I am not so sure now.