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Average Monthly TV Bill Could Reach $200 by 2020

How much would you be willing to pay to continue watching your favorite television shows? What about double the amount you're paying now?

April 10, 2012

How much would you be willing to pay to continue watching your favorite television shows? What about double the amount you're paying now?

According to new data from NPD Group, Americans paid $86 a month on average in 2011 for basic cable and satellite television service with premium channels. But as TV program licensing fees rise, monthly TV rates have grown by 6 percent each year — even as household income has remained relatively flat. If nothing changes, the average monthly TV bill in the U.S. will reach $123 by 2015. Worse, it will likely hit $200 by 2020.

According to NPD Group, 16 percent of U.S. households do not currently subscribe to cable or satellite TV services. The rise in housing vacancies during the mortgage crisis alone resulted in 5 million fewer TV subscriptions. Total TV subscriptions have not declined too much, however, as bulk TV contracts with apartment complexes and homeowners associations have allowed cable and satellite provider to retain subscriptions in many vacant homes.

But, as the cost of TV rises while consumers' income remains flat, the traditional business model for cable and satellite companies "appears to be unsustainable in the long term," Keith Nissen, research director for NPD Group, said in a statement. But changes to the industry will not come quickly or easily, he added.

"There is an open window for the industry to meet consumer needs and become to television what iTunes is to music; however, there is also a definite risk if pay-TV providers don't capitalize on the opportunity — and soon," Russ Crupnick, senior vice president of industry analysis for NPD, said in a statement.

Meanwhile, concerns about users "cutting cords" and cancelling service in favor of online TV watching still appear to be overblown. About in 2011 for an online-only viewing experience, according to the Convergence Consulting Group, but that's just a small sliver of the overall U.S. cable audience.

About 20 percent of consumers, however, certain pay services, spending less money on cable TV service compared to the previous year, thanks to the wealth of online video.