U.S. consumers saved money on entertainment in their homes in 2015 and paid a steeper price whenever they stepped outside.
TheWrap looked at the price of entertainment in 2015 and found that if you’ve been locked away binge-watching Netflix, consumer price statistics suggest you’re saving money — if missing out on fresh air.
Overall, consumer prices for entertainment have risen less than inflation in the last year. The government’s consumer price index for recreation — an imperfect category that includes everything from movie admissions and TV services to sewing machines and pet cats — was 0.6 percent higher in November than it was a year earlier. That increase compares with a 2 percent rise in the price for all items, after stripping out the volatile costs of food and energy.
But drilling down to more specific types of expenses shows that U.S. consumers are saving money on the entertainment they enjoy in their homes and paying a steeper price elsewhere.
The perception of those costs is another matter.
“If you asked consumers, they would probably suggest that they’re paying less for more content,” Todd Supplee, a partner in consulting firm PwC’s entertainment and media group, told TheWrap. “But when you dig into what they’re actually paying, and add up all the different services, they’re probably paying more.”
Price increases for in-home entertainment were tame in 2015. Cable/satellite TV and radio services rose 1.9 percent in the last year, by government measures — that’s in lockstep with inflation. A survey of book prices in the first three months of 2015 by School Library Journal indicated that hardcover books were a little bit cheaper in the first three months of the year compared with 2014. (SLJ examines the prices libraries pay, not consumers, but the stats suggest the direction of retail book prices.)
But the cost of diversions outside the home is climbing. Admission prices to movies, concerts and theaters have climbed 3.6 percent in the last year, and those to sporting events have soared 8.1 percent.
Supplee noted that entertainment spending today sometimes strays into different categories, fueling consumer confusion. Amazon, for example, offers a Netflix-like subscription video service as part of its $99-a-year Prime program, but the lion’s share of Prime members sign up for the program’s free two-day shipping benefit. Those costs may not factor into consumers’ perception of entertainment spending since customers think of its as an e-commerce expense.
But these are areas where consumers are saving money. American adults spend as much time on the Internet and apps as they do listening to the radio, and they spend more than an hour and a half each week watching video on either a computer or a phone, according to Nielsen.
In the last year, the price of Internet service has dropped 1.9 percent, and the category that includes phone plans is down 0.8 percent, government metrics show.
The cumulative costs of new streaming services complicate the matter.
2015 may be remembered as the year when cord-cutting materialized as a meaningful force, but snipping your pay-TV service for online alternatives doesn’t automatically save money. That’s because “cord-cutting” is a misnomer: It requires an Internet connection, and that means at least one cord into the home.
The average monthly cost for a standalone broadband Internet plan in the US was $69 in 2013, the latest figures available from the Federal Communications Commission’s annual broadband report.
Depending on which streaming services you choose, the total tab can stack up. Dish’s Sling TV costs $20 a month, HBO’s standalone service HBO Now commands a $15 monthly rate, and Netflix raised its monthly subscriptions to $10 for new members this year. Add those three together with the cost of Internet access, and the price to be a cord-cutter quickly exceeds the average U.S. price for pay-TV service plus connectivity bundled together.
According to the FCC, the average “double play” plan ranged between $81.81 and $106.40, depending on the download speed tier.
Confused? The best bet for a cheapskate entertainment buff is to avoid live sports, where prices are growing at the greatest rate.
But with all the couch surfing you’ll be doing to save money, creating a little live sport of your own is probably wise for your health, if not your wallet.