| Limited grasp of human behavior? You're describing the average economist there, unfortunately. :) Bundling all 100 channels for $40 doesn't benefit everyone. There are a ton of assumptions embedded in that analysis that may, or may not be true. You assume that every channel yields positive marginal utility, for example. Personally, I would pay for maybe three cable channels. But each additional channel would lower my utility because of the knowledge that I was contributing to its existence (I sleep better at night knowing that I am not contributing to the development of shows about obese people with 14 children, etc.). Thus, I do not have cable at all. You also assume that each channel costs the same to provide. Under an a-la-carte pricing scheme the prices would be all over the map because cable providers couldn't afford to offer certain channels for $1. So "the average customer chooses 30" would become a bit more complicated. There are also probably psychological issues in play. For instance, why aren't HBO and Showtime part of "basic" cable? Surely they could make more money through bundling! Starz was included (bundled) with Hulu (or was it Netflix?) for awhile, but it was removed because the network feared losing its image as a "premium" brand. I suspect HBO feels the same way. Beyond this, a television channel is a bundle in itself. You get a set of shows (or even episodes) and movies that you can't alter. So even if channels were un-bundled, the bundling would just move from cable providers to networks themselves, or to other intermediaries such as Hulu. |