Earlier quoted context omitted.
Limited grasp of human behavior? You're describing the average economist there, unfortunately. :) Bundling all 100 channels for $40 doesn't benefit everyone . There are a ton of assumptions embedded in that analysis that may, or may not be true. You assume that every channel yields positive marginal utility, for example. Personally, I would pay for maybe three cable channels. But each additional channel would lower m…
This, on your last paragraph. Premium a la carte channels (bundles, actually...you usually get 5 or so HBO channels) depend on being differentiated from the rest, one important variable being differentiated pricing, distribution and exclusivity.
The same could be done with television. Instead of buying a subscription to 200 channels, you could just buy a set of comedy channels, or channels related to cooking and entertaining. Of course the whole idea of a "channel" is really a legacy concept, but the concept would be the same.