Tuesday, April 10, 2012

Cable Pricing Itself Out Of The Consumers' Budget

The rising cost of cable programming, especially sports networks, may be to blame for the high cost of cable subscriptions and the drop in consumer purchases.  According to NPD Group, cable monthly fees have risen on average 6% annually while consumer income has remained flat.  "The dramatically rising cost of pay TV could lead to more consumers cancelling service in favor of more affordable over-the-top video services and free-to-air broadcast, NPD said."

Certainly consumers have sought ways to lower their costs, from downgrading services and switching to lower cost providers.  At the same time, ask a consumer which cable service they couldn't do without and it would be broadband.  Consumers may drop their cable service for broadband only and take advantage of over the top programming through web based devices.  Cable operators may be watching their business model change from pushing cable programming to pushing wire and wireless connectivity. With profit margins favoring broadband subscriptions, a gained broadband subscriber can more than offset the loss of a cable subscriber.