Pay-TV Prices Expected to More than Double

by Christopher Freeburn | April 12, 2012 4:09 pm

Think your cable or satellite bill is too high? Most people do. Hang on, though. Analysts are now predicting that the average pay-TV bill will more than double[1] in the next eight years.

Currently, consumers pay about $86 a month for TV service, according to NPD Group, a market research firm. That figure has been climbing for years as cable and satellite TV providers added premium subscription channels to their networks, and licensing fees from TV channel providers have soared.

According to NPD, the pricing situation – for consumers, at least – will only get worse. The average monthly cable bill will hit $123 by 2015. By 2020 the average consumer will be forking over $200 a month to his pat-TV provider.

While only 16% of U.S. homes don’t pay for subscription TV, rising prices at a time of economic uncertainty will eventually take a toll on the industry, NPD projects.

“As pay-TV costs rise and consumers’ spending power stays flat, the traditional affiliate-fee business model for pay-TV companies appears to be unsustainable in the long term,” said Keith Nissen, research director for The NPD Group, in a statement. “Much needed structural changes to the pay-TV industry will not happen quickly or easily; however, the emerging competition between S-VOD and premium-TV suppliers might be the spark that ignites the necessary business-model transformation of the pay-TV industry.”

In the wake of the mortgage crisis and recession, some consumers terminated their pay-TV services to save money. These people found they had other options in the form of over-the-air broadcast TV, Internet TV, and various video-on-demand (VOD) services, like Netflix (NASDAQ:NFLX[2]), Apple’s (NASDAQ:AAPL[3]) iTunes and Amazon’s (NASDAQ:AMZN[4]) movie streaming service.

NPD found that the growing variety and quality of Internet-based VOD services could eventually constitute a serious risk to pricey cable and satellite TV providers — if consumers ultimately decide that the convenience of subscription TV is outweighed by its high cost.

Source URL: https://investorplace.com/2012/04/pay-tv-prices-expected-to-more-than-double/

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