1.(10 points).Analyze and explain at least five important reasons for whyHBOdecided to offer its new serviceHBO Now.

Note: Question 2 and Question 3 below are based on the idea ofHBO Nowcannibalizing its existing business withComcast. Cannibalization is the phenomenon when a company's new business does not generate new customers, but only acquires its existing customers from another source. In this case, cannibalization happens when a customer gives up an existingHBOsubscription throughComcastin order to subscribe toHBO Now. Alternatively, a potential customer who would have anyway joinedHBOthroughComcastnow decides to joinHBO Nowdirectly. In both cases,HBO Nowwill not generate additional customers or revenue forHBO.

1. (10 points).Analyze theeconomic and strategicimpact of cannibalization onHBO. Some helpful numbers from the case are given below. Make any additional assumptions as needed (either supported by information/numbers given in the case, or otherwise supported by clear logical arguments).
2. Under the current model,HBOgets $7.77 per subscriber per month fromComcast(p.6).
3. HBO Nowis priced at $15 per month, the same price a consumer pays to subscribe toHBOas part of his cable service.
4. (10 points).Analyze theeconomic and strategicimpact of cannibalization onComcast.

How shouldComcastrespond toHBO Now? Some helpful numbers from the case are given below. Make any additional assumptions as needed (either supported by information/numbers given in the case, or otherwise supported by clear logical arguments).

1. HBO'spenetration among cable subscribers ranged from 14% to 42% (p. 6), with an average of say 30%.
2. Comcast'ssubscribers in the U.S. = 20 million (p.1)
3. (10 points).Analyze, fromCBS'sviewpoint (both economic and strategic), the pros and cons of itsOTTservice "CBS All-Access." Does it make sense forCBSto offer this service (analyze this question both from the viewpoint ofCBS,the broadcast network, and its local station affiliates)?
4. (10 points).Bundling is the phenomenon when a business sells two or more products together with a combined sale price. Cable providers currently sell a bundle of channels in their subscription service. We have witnessed the unbundling of several industries, with music being a prominent example (e.g., instead of buying an entire album, we can now buy an individual song oniTunes). Analyze the pros and cons forComcastto move to an unbundled business model. What would be your recommendation toComcaston this matter?