$5 - one channel
$7 - two channels
$10 - five channels
$20 - fifteen channels (you pick)
$50 - 40 channels (we pick)
$50 + $15 - 40 channels (the $50 package), plus <package B>
Source: I head a Product organization at a mega media org.
I mean, I get it: you're making people pay for stuff they don't need. You can charge a higher price despite users not actually watching everything they buy. Clearly, this tactic must work at some level, or else they wouldn't do it.
On the other hand, there are users like me who take one look at that and say, "ew", and walk away from TV completely. And it's not like I'm unwilling to pay for content, I just want to get what I want when I want it and not pay for the privilege of wandering through this ridiculous maze of content that no one cares about.
Maybe I'm being naive, but it just seems to me like this is a strategy that's going to kill the cash cow on the long run. Am I wrong?
You can see how this lack of bundling might impact content by looking at movies which are traditionally more a la carte. Movies are produced under the assumption that they all need to be financially self sufficient. The end result is that most content produced is either blockbusters based off big budget IP (which tries to address discoverability) or low cost and easy to produce content that can potentially be hugely profitable if it hits. The mid-budget TV (traditional TV mainstays like sitcoms would generally fall into this bucket) would likely disappear if everything was purchased a la carte.
It is also worth considering that most of the streaming content providers all do the same bundling as the traditional powers like Viacom. The difference is that the Netflixes of the world don't organize their content into channels. However there are definitely different verticals within these companies. Netflix has one for comedy[1] that is the equivalent of Viacom's Comedy Central, they just don't actively separate this content from the rest of their catalog.
[1] - twitter.com/NetflixIsAJoke
It's also possible that it would produce the secondary effect of killing channels that are more niche and not quite as profitable (maybe not profitable at all). Maybe there are channels that people would never pay for individually if given the choice, but would watch if given them as part of a package, and the aggregate value of which provides enough additional benefit to justify paying for the package as whole.
Or are you saying that these channel additions were part of an agreement or condition that to continue to offer some of the existing channels they needed to take the additional channels and charge more?
Until networks change their pricing model this a la carte option is not going to work out the way people hope.
Even paying extra in lieu of bundling, prices like that could work out if you make ESPN a separate $5-10 option.
If you're going to make suggestions, think of something realistic, at least.