Time Warner could offer the History Channel (H) and Showtime (S) individually or as a bundle ot
Question:
Time Warner could offer the History Channel (H) and Showtime (S) individually or as a bundle ot both. Suppose the reservation prices of customers 1 and 2 (the highest prices they are willing to pay) are presented in the boxes below.
The cost to Time Warner is $1 per customer for licensing fees.
1. Should Time Warner bundle or sell separately?
2. Should Time Warner bundle if everyone likes Showtime more than the History Channel,1.e., preferences are positively correlated.
3. Suppose Time Warner could sell Showtime for $9, and History channel for $8, while making Showtime-History bundle available for $13. Should it use mixed bundling. i.e., sells products box separately and as a bundle?
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil