Price Hikes to Break Pay TV Model?

According to the NPD Group, the average subscription for basic pay TV service and premium TV channels in the United States reached $86 in 2011. As TV program licensing fees have risen, pay TV monthly rates have also grown an average of 6% per year, even as consumer household income has remained essentially flat. If nothing changes, NPD expects the average pay TV bill to reach $123 by the year 2015 and $200 by 2020.

"As pay TV costs rise and consumers' spending power stays flat, the traditional affiliate-fee business model for pay TV companies appears to be unsustainable in the long term," said Keith Nissen, research director for the NPD Group, in a statement. "Much needed structural changes to the pay TV industry will not happen quickly or easily; however, the emerging competition between S-VOD and premium-TV suppliers might be the spark that ignites the necessary business-model transformation of the pay TV industry."
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