Description: Department Seminar

Location: 368A Heady Hall

Contact: Bertan Turhan

Title: Bundling and Streaming in Video Entertainment

Abstract: Over the past decade, market share in video entertainment has shifted from traditional cable bundles to direct-to-consumer (DTC) streaming services such as Netflix and Disney+. This paper studies the economics of bundling and vertical integration in this evolving landscape. We specify a model of consumer viewership and subscription choices with firms negotiating over and pricing content. We estimate the model using data on viewership, subscription market shares, prices, content availability, and licensing revenues from 1994 to 2023. We use the estimated model to evaluate welfare under alternative content packaging structures and to simulate mergers. In the long run, full re-bundling improves total industry profits and average consumer welfare relative to the current mixed model, however some services would have incentives to offer standalone products. Moving to a streaming-only world hurts industry profits and average consumer welfare. We estimate that mergers that consolidate streaming services lead to consumer benefits, while mergers between traditional cable channels reduce consumer welfare.