Cost of Pay TV Continues to Rise

PORT WASHINGTON: The monthly rates for pay TV have grown an average of 6 percent per year, with The NPD Group predicting monthly bills to reach $200 by 2020.

The average pay-TV subscription for basic pay-TV service and premium TV channels in the U.S. reached $86 in the U.S. According to a recent NPD survey, Digital Video Outlook, 16 percent of U.S. households do not currently subscribe to pay-TV services.

“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, the research director for The NPD Group. “Much-needed structural changes to the pay-TV industry will not happen quickly or easily; however, the emerging competition between SVOD and premium-TV suppliers might be the spark that ignites the necessary business-model transformation of the pay-TV industry.”

NPD’s Entertainment Trends in America report finds that those cancelling their subscriptions are doing so mainly because of economic considerations. However, many are still accessing TV programming from free-to-air broadcast, free Internet TV and lower-priced SVOD services such as Netflix.

“Despite the plethora of OTT options for movies and TV, most consumers want their pay-TV providers to be central and relevant to the acquisition and viewing experience,” added Russ Crupnick, the senior VP of industry analysis for The NPD Group.

Fifty-nine percent of pay-TV subscribers preferred having one single provider for their pay-TV services, compared to 21 percent who desired multiple providers, and 21 percent who expressed no preference. Sixty-two percent of subscribers wanted premium TV either delivered by their pay-TV provider directly, or from a service affiliated with their pay-TV provider. Only 20 percent of pay-TV subscribers were likely to cancel their pay-TV service, if they could get their favorite shows online.

“Pay-TV providers offer a convenient, one-stop shop for subscribers, and the majority of customers like it that way,” said Crupnick. “There is an open window for the industry to meet consumer needs and become to television what iTunes is to music; however, there is also a definite risk if pay-TV providers don’t capitalize on the opportunity—and soon.”