This is yet another blogpost to expand on a tweet I wrote yesterday.
Everything in life (and business) is a bundle
— Karthik (@karthiks) August 3, 2020
Just to remind you, Suprio Guha Thakurta (former Chief Strategy Officer at The Economist) and I have started The Paper, a 4-days a week newsletter that goes in (some) depth into one business story from India each day. We rely purely on “secondary reporting” (collating from news items), to which we add our own commentary.
Last week we wrote about a new TRAI order about bundling of TV channels. Essentially the telecom (and broadcast) regulator in India has gone to great lengths to ensure that TV channels don’t get bundled in a way that makes it difficult for the customer to choose.
While the effect of this bundling order might be uncertain, one question needs to be asked to TRAI – why are they only concerned about bundling at one level (across channels) and not at the television channel level itself?
After all, television channels are also bundles.
For a fixed fee a month (and a willingness to see a certain proportion of paid content), subscription to a television channel gives you the opportunity to watch any of the programming that the channel offers. Let’s take a sports channel, for example (IMHO, live sports is the only reason you need cable TV. Everything else can be streamed).
Let’s say there is one Sony channel that offers live coverage of UEFA Champions League, NBA and cricket played in England (I know all these are part of the Sony bouquet, though I don’t know if they are regularly broadcast on the same or different channels here. Let’s assume there is one channel that shows all three).
Assume that I’m only interested in the football, but not in either NBA or cricket played in England. In order to watch my football, I’m forced to buy subscription to the entire TV channel (and thus pay for the cricket and basketball as well). Why am I being forced to do this?
Take any channel, and the outcome is going to be similar. You will subscribe to the channel only because you want to watch a few programs, but you are forced to pay for everything. Is this fair?
Let’s move beyond televisions. Consider the Times of India. I’m mainly interested in the local news and the bridge column (OK, my daughter has taken a liking for the cartoon page as well). Still I need to pay for the whole paper. Is that fair?
Essentially, bundling exists everywhere. And it is going to be incredibly hard to regulate it away. TRAI wants to reduce one kind of bundling (across channels), but its regulation seems blind to in-channel bundling. Essentially it is impossible to regulate against in-channel bundling as well.
And in any case, there are clear benefits to customers from bundling, the most important of which is the elimination of “mental cost”. If some day I suddenly want to watch NBA, it’s already there on the Sony channel I’ve paid for, and I don’t need to rush that moment to try and buy subscription.
Yes, pay per view exists in certain markets, and it can be profitably offered for certain kinds of premium events whose viewership is so uncorrelated with viewership of other events that bundling is nigh impossible.
Also, isn’t your spouse or partner also a bundle? To quote Esther Perel:
Today, we turn to one person to provide what an entire village once did: a sense of grounding, meaning, and continuity. At the same time, we expect our committed relationships to be romantic as well as emotionally and sexually fulfilling. Is it any wonder that so many relationships crumble under the weight of it all?
I leave you with her TED TAlk.
3 thoughts on “TV Bundling”
I don’t know about what Trai did to piss you off, but you/they seem to be painting bundling with a broad brush. Everything is a bundle, yes. But not everything should be in a bundle.
There are affinity bundles, TV channels you mentioned are a good example of it. A sports channel only has sports, a news channel only has news, so on. So when someone gets a sports channel, there’s a fair understanding of the channel’s bundle’s value.
On the other hand, TV channel bundles are the opposite of affinity based. Most bundles will include all channels from a media house—sports channels, news channels, general entertainment channels, movies channels, kids channels, info/edu entertainment channels, and even religious channels. To get a sports channel, and maybe occasionally watch a movie, we need to pay for all the other channels. The bundle is overcharging me for sure. But even people who watch a wider variety of TV than me can’t decipher the true value of such a wide, incoherent bundle, and whether it’s worth the price. The main winners are the media house and the cable provider, who get to skim the surplus. (The other winners are the few people who watch very low viewership channels; they get subsidised by everyone buying the bundle.)
Similar examples exist everywhere. Eg, affinity bundles in fmcg where, say, a shampoo and conditioner, or detergent and softener are bundled together. Those things are used together, in similar volumes, by similar kind of users. Bad bundles are like those big gift baskets that used to appear around Diwali with a wide mix of products, the only thing common to them being the fmcg company selling them.
This should’ve been a blog post ?
Yes. You should copy paste this to your blog, with a link to this one 🙂