Although the wages for employees in the US have remained the same, bills for cable TV services have stealthily been increasing at a rate of 6% every year. According to an eye-opening industry forecast released yesterday, the amount will pass $200 a month in 8 years time. The Director from NPD research firm Keith Nissen said, “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.”
He went on to point a finger at the TV price-spiral which is on a tug-of-war between cable operators and creators of programming with regards as to who gets the bigger share of ever-rising cable payments. All this seems like a scenario where a fish is flopping around on a river bank as two fishermen fight over who gets to take it home. As expected, steadily increasing cable bills have caused many users to cut the cord and get their fill of entertainment from online sources in 2011. On top of that, 11% more are planning to follow suit this year.
An analyst from NPD named Russ Crupnick said, “Cable faces big challenges on how to stay relevant. One way or another, people will be spending much more in the future on entertainment. Other options aren’t going to be free either.” You can tell that he thinks that the $86 spent monthly on an average for premium cable services will rise to $123 by 2015 and the inevitable $200 by 2020 but also hints that other alternatives such online video providers Netflix, Amazon Prime and iTunes would eventually either attempt to catch up or be at the same level with the same annual increases.
Filed in . Read more about Thoughts.