Weird. I've been encountering Megan McArdle's written words for more than a decade now. And that's not just the first time I've agreed with her on anything; it's the first time I've not thought she was incredibly and intentionally wrong and misleading.
So therefore, I must now reexamine my long-standing position that the bundle is good for consumers, starting from scratch. (I know even a stopped clock is correct twice a day, but she's never correct.)
I disagree that we necessarily want bundling. With the hotel metaphor, you don't want to charge for every little thing, but the customer may not want to pay for a hotel that has a pool and a gym. And with hotels, there are usually many options where you can find a room with the amenities and price you are looking for. The metaphor would be more like you needing to pay double for a hotel room which has a pool, a gym, a 24/7 concierge, a business center, and continental breakfast (none of which you will take advantage of) all so you can have access to a shuttle to the airport. Her metaphors are about paying separately for things you want, not being forced to pay for many things just to get one.
Yes, on average people would pay the same for a la catre, but there would be a large range depending on how many channels you actually watch.
She even used "The Wire" as an example of a niche show that would get hurt by unbundling. But it's HBO which is already a la carte. The other example she gave was "Mad Men". But AMC wouldn't be hurt by an a la carte approach since it is by far the most popular channel owned by it's company and is used as leverage to get cable companies to pay for IFC, WE tv, and SundanceTV. AMC has the high rated cable show for God's sake.
She's dead on about everyone wants bundles. In fact channels are bundles too (why do I have to pay for HBO, when I just want to watch Game of Thrones?).
People just want their bills to go down and want more options. The cable companies have an essential service (telecommunications) and they tye it to non-essential services like video programming.
We need a new model, one without channels. But certainly one that'll still be a bundle.
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Weird. I've been encountering Megan McArdle's written words for more than a decade now. And that's not just the first time I've agreed with her on anything; it's the first time I've not thought she was incredibly and intentionally wrong and misleading.
So therefore, I must now reexamine my long-standing position that the bundle is good for consumers, starting from scratch. (I know even a stopped clock is correct twice a day, but she's never correct.)
I disagree that we necessarily want bundling. With the hotel metaphor, you don't want to charge for every little thing, but the customer may not want to pay for a hotel that has a pool and a gym. And with hotels, there are usually many options where you can find a room with the amenities and price you are looking for. The metaphor would be more like you needing to pay double for a hotel room which has a pool, a gym, a 24/7 concierge, a business center, and continental breakfast (none of which you will take advantage of) all so you can have access to a shuttle to the airport. Her metaphors are about paying separately for things you want, not being forced to pay for many things just to get one.
Yes, on average people would pay the same for a la catre, but there would be a large range depending on how many channels you actually watch.
She even used "The Wire" as an example of a niche show that would get hurt by unbundling. But it's HBO which is already a la carte. The other example she gave was "Mad Men". But AMC wouldn't be hurt by an a la carte approach since it is by far the most popular channel owned by it's company and is used as leverage to get cable companies to pay for IFC, WE tv, and SundanceTV. AMC has the high rated cable show for God's sake.
She's dead on about everyone wants bundles. In fact channels are bundles too (why do I have to pay for HBO, when I just want to watch Game of Thrones?).
People just want their bills to go down and want more options. The cable companies have an essential service (telecommunications) and they tye it to non-essential services like video programming.
We need a new model, one without channels. But certainly one that'll still be a bundle.