Cable Technology Feature Article
Video Subscription Price Hikes Coming, Again
By Gary Kim, Contributing Editor
Every January, it seems that providers of video entertainment raise their prices, typically outpacing the rate of inflation. And for the most part, that remains the case for 2013.
DirecTV (News - Alert) plans to increase the prices of its programming packages by an average of 4.5 percent, starting Feb. 7, 2013, a move DirecTV attributes to higher programming costs.The company said the programming costs it pays to owners of television channels will increase about eight percent next year, the Wall Street Journal reports.
Dish Network will also increase the price of its core TV bundles between seven percent and 20 percent in January 2013, with most packages rising $5 a month. “As an industry we have seen increases in double-digit percentages,” commented Dish Spokesman John Hall.
AT&T (News - Alert) U-verse prices are going up as well in the New Year.
In 2012, Comcast (News - Alert), DirecTV and AT&T raised their rates so as we cross into the 2013 the price inflation really doesn’t come as much as a surprise. If nothing changes, NPD expects the average subscription video bill to reach $123 by 2015 and $200 by 2020.
Bernstein Research Analyst Craig Moffett points out that over the last five years programming costs at DirecTV have risen 32 percent for example. But perhaps more importantly, those increases are accelerating, with costs rising upwards of 10 percent year-over-year. "This is a train wreck in the making," says Moffett.
Some programmers point the finger at ESPN (News - Alert) and the other sports networks. ESPN says its prices are justified by the high ratings the network gets. Some might say sports programming constitutes as much as half of all programming expenses.
And though some distributors, ranging from Time Warner (News - Alert) Cable to Dish Network, have made efforts recently to begin dropping networks which were intended to send signals to programmers even the head of the major U.S. cable trade industry association says there is a growing threat of regulator intervention if the industry cannot restrain price inflation.
Edited by Jamie Epstein