[draz]

YouTube is not the content producer, rather strikes deals with content producers. The reality is there is consolidation in the media world, with a few mega corporations managing most channels. They typically bundle a few channels together for vMVPDs/MVPDs, for leverage - “you want channel X, you must also get channel Y.”

Source: I head a Product organization at a mega media org.

[eslaught]

Honest question: why do big organizations do this?

I mean, I get it: you're making people pay for stuff they don't need. You can charge a higher price despite users not actually watching everything they buy. Clearly, this tactic must work at some level, or else they wouldn't do it.

On the other hand, there are users like me who take one look at that and say, "ew", and walk away from TV completely. And it's not like I'm unwilling to pay for content, I just want to get what I want when I want it and not pay for the privilege of wandering through this ridiculous maze of content that no one cares about.

Maybe I'm being naive, but it just seems to me like this is a strategy that's going to kill the cash cow on the long run. Am I wrong?

[slg]

Subsidizing new content and making it easily discoverable are the primary reasons for bundling. When new content comes to you for free with your existing purchase, the only thing stopping you from trying it out and potentially getting hooked is your willingness to commit time to it. If every piece of content had a price associate with it, people would be much less willing to try new things. This same principle applies at both the individual show level and at the channel level. The people selling you this content want you to consume as much as possible so you don't associate your purchase with a single show and end up canceling HBO once Game of Thrones ends.

You can see how this lack of bundling might impact content by looking at movies which are traditionally more a la carte. Movies are produced under the assumption that they all need to be financially self sufficient. The end result is that most content produced is either blockbusters based off big budget IP (which tries to address discoverability) or low cost and easy to produce content that can potentially be hugely profitable if it hits. The mid-budget TV (traditional TV mainstays like sitcoms would generally fall into this bucket) would likely disappear if everything was purchased a la carte.

It is also worth considering that most of the streaming content providers all do the same bundling as the traditional powers like Viacom. The difference is that the Netflixes of the world don't organize their content into channels. However there are definitely different verticals within these companies. Netflix has one for comedy[1] that is the equivalent of Viacom's Comedy Central, they just don't actively separate this content from the rest of their catalog.

[1] - twitter.com/NetflixIsAJoke

[draz]

That’s exactly right. I can’t talk numbers, but a consumer is more likely to stick with a channel/app by X% (where X is a significant number) if s/he watches Y shows. Y increases as X increases.

[josefresco]

Bundling needs to die. Let the channels sink or swim like every other consumer product. This "logic" is just industry PR that's been accepted and normalized.

[jmchuster]

I'd imagine they've done the studies and found that they'd lose more money overall. The gain in new customers who only want a specific channel must not outweigh the revenue they'd lose by customers downgrading to less channels.

It's also possible that it would produce the secondary effect of killing channels that are more niche and not quite as profitable (maybe not profitable at all). Maybe there are channels that people would never pay for individually if given the choice, but would watch if given them as part of a package, and the aggregate value of which provides enough additional benefit to justify paying for the package as whole.

[whatever1]

This is the business model that sunk the cable TV and opened the market to netflix, hulu etc. The fact that a Silicon Valley company made a fancier app with smarter DVR capabilities will not save this doomed business model.

[meow81]

yeah but in this case they brought on these extra channels and are spinning it as "continuing to innovate". they didn't need to bring these additional channels on. without these channels like for the past year or so, wouldn't the price have remained the same?

Or are you saying that these channel additions were part of an agreement or condition that to continue to offer some of the existing channels they needed to take the additional channels and charge more?