April 25, 2018
Consumers who complain about their cable bill may have good reason.
Multichannel video affordability in the United States has plummeted since the turn of the millennium, squeezing the penetration rate, particularly among the more economically vulnerable households, according to new data from Kagan, S&P Global Market Intelligence.
Since 2000, there has been a 74% increase in the inflation-adjusted pay-TV bill while incomes have stagnated, according to the research.
The estimated nominal average monthly multichannel revenue per subscriber across the cable, DBS and telco platforms rose at a 5.5% CAGR between 2000 and 2017. Kagan calculated U.S. multichannel purchasing power based on 2017 inflation-adjusted annual multichannel average revenue per user, or ARPU, and average income figures. The affordability calculation dropped from a 10 in 2000 to a 6 in 2017.
Multichannel offerings have evolved a great deal since 2000, including a greater number of networks and advanced services such as video on demand, DVR services and improved user interfaces, with the vast majority of the packages delivered to subscribers digitally and in HD, but consumers’ ability to pay the price for that improvement didn’t grow much.
“The eroding legacy multichannel affordability partly explains the popularity of over-the-top services such as Netflix Inc. and Amazon.com Inc.’s Prime Video,” according to Kagan.