You are Hollywood mogul. You would like to integrate and offer a bundle of 3 streaming...

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You are Hollywood mogul. You would like to integrate and offer a bundle of 3 streaming services. They are Paramount Plus, Hulu and Peacock. What should you do. Let us pretend that the marginal cost of providing each product is zero. You want to maximize profits. Assume there are 1 million of each customer type. Here are their subscription charges for one month. Customer Type 1 Customer Type 2 Customer Type 3 Paramount $5 $15 $20 Hulu $10 $10 $15 Peacock $20 $10 $5 (a) If you had to sell each product separately, what would you price them at to maximize profits? (b) If you had an option to bundle the three services together (a pure bundle, no separate or al a carte purchases possible), what would you price the bundle at? (c) How much would this pure bundle increase or decrease profits by? You are Hollywood mogul. You would like to integrate and offer a bundle of 3 streaming services. They are Paramount Plus, Hulu and Peacock. What should you do. Let us pretend that the marginal cost of providing each product is zero. You want to maximize profits. Assume there are 1 million of each customer type. Here are their subscription charges for one month. Customer Type 1 Customer Type 2 Customer Type 3 Paramount $5 $15 $20 Hulu $10 $10 $15 Peacock $20 $10 $5 (a) If you had to sell each product separately, what would you price them at to maximize profits? (b) If you had an option to bundle the three services together (a pure bundle, no separate or al a carte purchases possible), what would you price the bundle at? (c) How much would this pure bundle increase or decrease profits by?

Answer rating: 100% (QA)

To determine the optimal pricing strategy for each product and the bundle we need to consider the customer demand and the associated prices for each customer type Since the marginal cost of providing ... View the full answer