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Opening Arguments

Bundle me, baby

From Wired: Bundled cable channels are here to stay -- and that's a good thing.

These days, barely a week passes in the U.S. entertainment industry without litigation, legislation, or argumentation over bundling–the practice of offering a “package” of channels instead of the option to buy a la carte. I, for one, say enough with bundle bashing. Bundling is hardly unique to the entertainment industry, nor is it solely an American phenomenon. There’s a reason for this: Bundling benefits consumers and vendors in more ways than one.

Bundles exist and are popular with consumers across a range of goods and services: Computer software, automobile trim and option packages, restaurant meals, gym memberships, even amusement park tickets. And despite all the furor over television bundling, non-TV programming often is bundled too: NBA League Pass, Netflix, Hulu, even Sirius radio subscriptions require consumers to pay a flat rate for a package that may include programs they don’t want.

While anti-bundling advocates purport that a la carte programming would reduce costs to consumers, it simply isn’t true. In a series of posts from his blog Stratēchery, Ben Thompson provides compelling evidence to show that if ESPN was offered on an a la carte basis, it could maintain its current profitability only if individual subscribers paid about $100 a month for it. The assumption that subscribers could support a la carte programming without advertising is further underscored in a recent “Future of TV” report that predicted “~50 percent of total TV ecosystem revenue would evaporate, and fewer than 20 channels would survive in an a la carte world where consumers are required to bear 100 percent of the cost of the channel.” Could pay-TV reduce subscriber fees by taking a smaller profit margin? Perhaps, but that’s a topic for another discussion.

I guess it's not very libertarian of me, but I've never really gotten behind the "give me just what I want and nothing more" a-la-carte battle cry. The beauty of cable is that there are tons of choices, both popular mainstream ones and ones catering to quirkier tastes, and that is made possible by bundling. If weI have to pay individually for our quirkier choices, the prices are going to be higher because the pool of viewers will be smaller. I might be getting a lot of stuff I don't really watch with bundling, but if I wake up at 2 a.m. some day and need a little distraction to lull me back to sleep, I'm sort of glad that the Food Network and C-Span II are there.