Household income has stagnated, but the average cost of satellite, telco and cable has climbed 6 percent annually
TV lovers may need to take out a loan when the cable bill arrives — in 2020.
By that time, the average monthly cost for pay-TV service in the United States is expected to balloon to $200, according to a new forecast by the research firm The NPD Group.
Household incomes in the country have stagnated in recent years, but cable, satellite and telco bills have not. The monthly rates for pay-TV have jumped an average of 6 percent per year, the firm finds.
"The increase sounds slight, but it's really not," Russ Crupnick, an entertainment industry analyst at The NPD Group, told TheWrap." Consumers are going to have decide when they get that bill for $100 or $200 if cable can be one of their most valuable entertainment expenses going forward."
If rates continue to climb at that pace, The NPD Group predicts that the average monthly pay-TV bill will reach $123 by 2015, up from $86 last year.
Beyond a thirst for profits, the culprit, The NPD Group says, is the rising costs that entertainment companies charge cable services to broadcast their channels.
"As traditional streams of revenues like DVDs shrink, content creators are going to look for other areas to make up the difference," Crupnick said. "It's going to cost more to license content across all of the entertainment categories."
Given the escalating cost of cable and other pay-TV services on top of a still sluggish economy, is it any wonder that more and more people are cutting the cord and fleeing to digital services like Netflix and Hulu.
A recent report from the Convergence Consulting Group found that 2.65 million Americans canceled TV subscriptions between 2008-2011 in favor of lower-cost internet subscription services or video platforms.
The one saving grace for cable, satellite and telco companies is that Convergence also postulated that the subscription exodus will slow as companies like Netflix grapple with rising licensing fees for the kind of top-shelf movies and shows that are luring consumers away from pricey pay-TV subscriptions.
The NPD Group said its finding are based on quarterly electronic surveys of 1,000 U.S. households, as well as finding from its "Entertainment Trends in America" report, which surveys 10,000 consumers semi-annually.