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Hello, I am having a very difficult time understanding how to determine if Time Warner should bundle or not.

Hello,

I am having a very difficult time understanding how to determine if Time Warner should bundle or not. The company charges $1 licensing fee per customer which I'm assuming would play a factor, however, logically I would assume that if consumers are not interested in watching the history channel, they would be unwilling to pay the bundle price for a channel they won't watch. Can you please review the below data and question and advise if this would be a positive or negative correlation and why?


My instinct says the company should not bundle and the result in decreasing orders would be a negative correlation due to the decrease in demand and increase in seller cost. Is that accurate?


QUESTION:

Showtime History Channel

Customer #1 $9 $2

Customer #2 $3 $8

2. Should Time Warner bundle if everyone likes Showtime more than the History Channel, i.e., preferences are positively correlated.

Top Answer

bundling is certainly... View the full answer

1 comment
  • I understand this perfectly! Thank you very much for providing an example that illustrates how bundling would be mutually beneficial to both #1 and 2.
    • perfectdyme
    • Aug 07, 2018 at 12:09pm

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