Do Consumers Really Want Their Media in a Bundle?

[qi:_newteevee] When it comes to buying content, consumers prefer to pick a bundle rather than buy à la carte, Daniel Taylor, a GigaOM Pro analyst, argues over at NewTeeVee. To bolster his argument, he used the example of paying for cable, rather than individual channels (even though folks are still agitating for à la carte pricing) and he discounts Apple’s impact on album sales as consumers buy only singles through iTunes. Instead, he focuses on the fact that most of a consumer’s household income goes toward buying bundled services rather than individual media products:

But if we look at the $553 billion U.S. digital home marketplace, consumers don’t spend that much money outside of bundles, as described in a new GigaOM Pro report (subscription required). Sales of individual media products — such as songs, albums, video games, software, DVDs, etc. — occupy less than 15 percent of consumer spending. Each month, the average U.S. household spends close to $250 on the quadruple play services that include: fixed-line telephony, wireless telephony, pay TV and Internet access. By comparison, that same household spends $13.75 buying music, $16 buying DVDs, and $70 on pay TV services.

Herein lies the paradox. When we have the choice to spend for exactly what we want, we spend less. But given the choice between assembling our own bundle and buying one that someone else has built, we choose the latter. I can’t count the number of times I’ve given up on the dollar menu and selected a “combo” meal just to get through the line at the local drive-through. When the music industry was selling us albums, we’d buy an entire CD to get one or two songs. In a world of Internet downloads, we spend a couple of dollars on the one or two songs we know and give up on the rest of the album.

What his post doesn’t address, which I think is important, is that consumers still have to jump through a lot of hoops to assemble their best bundle today. That’s why it’s easier to subscribe to cable TV from a service provider to get the video content you want, rather than buy DVDs, subscribe to a variety of sports packages online, or hunt down last night’s episode of “30 Rock” on Hulu or YouTube. Or to bring it home to service providers that get $250 a month, it’s why most people choose to get a triple play rather than just broadband, because assembling the TV content and making sure the voice over IP phone service works is still too hard. People want what’s cheap and what’s easy, but mostly they just want what’s easy.

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