Buffet or à la Carte: Pricing Digital Goods

Abstract

Pricing strategy plays a key role in most organizations. The pricing decision of bundling or à la carte in the case of cable television industry is a long debated one. While consumers seem to favor the à la carte option, operators are persistent in continuing with the bundling options. In this chapter, we explore both sides of the argument. We then discuss several factors affecting the players in the eco-system of cable television industry; these include the subscriber-operator relationship, operator-distributor relationship, and the role of government policies affecting their decisions. In concluding we use these factors to conceptualize a framework that seeks to assist the players in the cable television industry in choosing an adequate pricing model.