Price Hikes to Break Pay TV Model?

April 10, 2012
According to the NPD Group, the average subscription for basic pay TV service and premium TV channels in the United States reached $86 in 2011. As TV program licensing fees have risen, pay TV monthly rates have also grown an average of 6% per year, even as consumer household income has remained essentially flat. If nothing changes, NPD expects the average pay TV bill to reach $123 by the year 2015 and $200 by 2020."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."