Pay TV bills up 74% since 2000, are a leading cause of cord cutting, Kagan says

The affordability gap for cable has steadily eroded over the past decade and a half. (pasja1000)

Pay TV has become dramatically less affordable since 2000, research company Kagan, S&P Global Market Intelligence notes, with the average bill increasing in price by 74%, even adjusted for inflation.

The affordability gap is “squeezing penetration rates, particularly among the more economically vulnerable households,” the research company added. 

Indeed, as the chart below shows, prices for multichannel packages have steadily risen from just below $60 a month in 2000 to close to $100 in the peak year of 2016. Median wages, however, have remained flat—heck, they’ve actually fallen a bit. 


Like this story? Subscribe to FierceVideo!

The Video industry is an ever-changing world where big ideas come along daily. Cable, Media and Entertainment, Telco, and Tech companies rely on FierceVideo for the latest news, trends, and analysis on video creation and distribution, OTT delivery technologies, content licensing, and advertising strategies. Sign up today to get news and updates delivered to your inbox and read on the go.

Compounded annual gross revenue for cable, satellite and telco pay TV platforms rose at at a rate of 5.5% a year from 2000 to 2017.

RELATED: Major pay TV operators set to report losses of around 510K users in Q1, analyst says

The affordability gap, measured as a basic margin between consumer income and subscription price, steadily eroded from a “10” in 2000 to a “6” in 2014. (A slight increase in median and average wages has increased the margin the last three years.)

“The eroding legacy multichannel affordability partly explains the popularity of over-the-top services such as Netflix Inc. and Inc.'s Prime Video,” Kagan said in a statement. 

Indeed, with competition “creeping on all fronts,” Macquarie analyst Amy Yong predicted yesterday that the major pay TV operators will report another 510,000 lost subscribers in the first quarter of this year. 

Suggested Articles

CBS and Viacom have officially set the executive team that will lead their digital services including CBS All Access, Showtime and Pluto TV.

The FreeWheel Council for Premium Video is calling for the adoption of a universal standard for managing cross-platform ad campaigns.

Roku is rolling out a discounted bundle deal for its users that buy both Showtime and Starz subscription streaming services on the Roku platform.