Seeso Case

Seeso Case

Unbundling cable in the U.S. cable market–Xiaoyu Zhu



From the above analysis of the specific case of SeeSo, we can generally conclude that from the perspective of producers, under any of the three conditions, unbundling is more profitable than bundling: 1) Consumers' preferences are not significantly different or consumers have similar preference; 2) Firms have significantly high marginal cost; 3) The number of the consumers who have significant preference for one product is significantly high.



However, unbundling can benefit consumers or increase consumer surplus under any of the four conditions: 1) Consumers' preferences are sufficiently different; 2) Consumers might benefit from the price reduction; 3) The percentage of the consumers with similar preference relative to consumers with different preference; 4) Firms have significantly low marginal cost. However, it seems that apart from the fourth one, these approaches are not workable for U.S. cable markets. Based on the following research and analysis, unbundling cable is less likely to increase consumer surplus for U.S. consumers because of the large proportion of consumers with similar preference ... Show more content on Helpwriting.net ...In the year of 2011, only 17 of 137 channels were viewed over one week on average. In fact, this is also the cable market trend in recent years. Under the current pay TV system, an average U.S. household subscribes to about 200 channels but watches only between 10 and 15 per month, according to Martin and Medina's research. In 2014, 15 cable channels averaged more than one million viewers over n the calendar year. It shows that people have similar preferences towards these popular TV channels. This situation is similar to the first two cases discussed in the part of "Four different cases when unbundling is more profitable" so the consumer surplus will decrease on the

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