Effects of Media Use Behavior on the Preference for Channel Bundling of Multichannel Services

Abstract

This paper analyzes the factors that influence the consumer’s preference for channel bundling of multichannel services (provided by Cable TV, DBS and IPTV) in Korea, focusing on the consumer’s media use behaviors as key determinants. For the analysis, we use the mixed logit model and estimate the coefficients of interaction terms between household attributes and channel bundle characteristics of the multichannel service. The micro data on household attributes including media use behavior comes from the Korean Media Panel survey conducted by Korea Information Society Development Institute (KISDI) in 2013, while the data on the characteristics of multichannel services were collected from the operators’ homepages, except viewer ratings which were provided by the Nielsen Korea, Inc..We find that (i) households who preferred channel bundles composed of higher viewer-rating programs are those who spent more time watching terrestrial broadcaster’s programs than the other TV programs or who spent more time surfing the internet; (ii) households who preferred channel bundles composed of a variety of genres are those who spent more time watching VOD on TV or who spent more time either watching videos via PCs/mobile devices or surfing the internet; and (iii) single dwellers or married couples without children have preferences for the channel bundle composed of more watched channels, while upper-income households are less sensitive to the price.