Here’s the latest proof that the financial model of the pay-TV industry is broken: despite a growing number of cable networks, people are watching the same number of channels they always have.
A new study by Nielsen shows that the number of channels available in the average U.S. TV household has ballooned in recent years, from 129 in 2008 to 189 in 2013, a 46 percent increase. In the same time period, the number of channels people actually watched was nearly flat, inching up slightly from 17.3 to 17.5. “This data is significant in that it substantiates the notion that more content does not necessarily equate to more channel consumption,” Nielsen wrote in the release accompanying the data. “And that means quality is imperative—for both content creators and advertisers.”
Unfortunately for consumers, they are paying more for all these channels that they’re not watching. Data from the Federal Communications Commission show that the average price of expanded cable increased from $49.65 in 2008 to $61.63 in 2012. That’s a 24 percent increase, more than double the rate of inflation. The cost per channel decreased during that period, from $0.68 to $0.51, but because so many new channels emerged, overall cable bills rose considerably.
Of course, a more positive take (at least for the entertainment industry) is that traditional TV has managed to keep customers’ attention despite the proliferation of online video options. In 2008, Netflix’s streaming service was a curious bonus feature for its DVD-by-mail subscribers. Today 34 million people in the U.S. pay for Netflix streaming. Add in offerings from Amazon Prime, Hulu, YouTube and countless others, and it’s kind of impressive that people even have time to watch 17 channels on the regular boob-tube. Nielsen data show that when combining live and time-shifted television, the average person watched just one less minute of TV in the fourth quarter of 2013 compared to the fourth quarter of 2012.
From a consumer perspective, though, all these new services come at an additional cost to the ever-rising cable bill. Eventually, customers won’t accept mounting expenses for a service that brings no additional entertainment to them personally. We may have already reached an inflection point—according to research firm SNL Kagan, pay-TV subscribers declined for the first time ever in 2013.
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