TV Prices Expected To Rise

Commentary

• by Wayne Friedman , Staff Writer, January 8, 2018

Real wage increases were microscopic in 2017 -- against higher consumer price inflation. What does this mean for consumers' monthly entertainment costs?

Perhaps more looking into the media space -- especially with more free over-the-air TV space and free internet content. Cord-cutting of pay TV packages won’t go away in 2018.

The U.S. Bureau of Labor Statistics says real average hourly earnings increased 0.2% from November 2016 to November 2017. In the same year, inflation was 1.7% higher.

Looking longer term, after adjusting for inflation, wages are only 10% higher in 2017 than they were in 1973 -- with annual real wage growth just below 0.2%.

Consumers continue to do the math; home entertainment consumption is a key focus.
In 2018, many pay TV operators will be hiking monthly fees. For example, Comcast's X1 Starter Triple Play package will increase by 3.3% to $155 per month; its Premier Triple Play will rise 2.4% higher to $215 monthly.

Similar moves from other companies, depending on the package, are coming: Charter prices are rising 7% to 8%; Cox is going up 2.5% to 6%; DirecTV will increase 3% to 7%; and Dish Network will rise from 3.5% to 7%.

Much of this is due to changing overall business dynamics. One estimate from MoffettNathanson Research says traditional pay TV subscribers -- cable, satellite and telco services -- lost a collective 3.1% in 2017, with nearly 900,000 subscribers in total.

Outside the home, there have been similar increases. In 2017, the average movie ticket price, according to boxofficemojo.com, rose 3% to $8.93 a ticket, with 6% fewer tickets (1.21 billion) sold versus 2016.

What remains? Although many media/entertainment analysts crow over the idea that consumers will spend more of their paychecks on entertainment -- with newer inexpensive digital video platforms available, as well as free Internet content -- that is expected to change.

Media disruption came with new businesses over the past few years -- a reaction to slowly eroding consumers looking for cheaper alternatives.

Small paycheck gains, even with some expected tax savings later this year, will make that glaringly evident.