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Cable TV In 2020: $200 Per Month?

If licensing fees for sports and other TV content keep rising on their current trajectory, the average pay-TV bill in the U.S. will jump to $196 by 2020 -- more than double the $86 average in 2011, according to an analysis by research firm NPD Group.

Pay TV monthly rates have grown an average of 6% annually even as household income has remained flat in recent years, NPD noted.

"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," NPD research director Keith Nissen said.

Of NPD's $196 monthly bill estimate for 2020, $110 would be for regular pay-TV service and $86 would be for premium channels. That's compared with $65 for cable TV and $21 for premiums per month in 2011, according to the firm.

By 2015, NPD projects pay-TV service to be an average of $123 per month ($82 for core service and $41 for premium channels).

The dramatically rising cost of pay TV could lead to more consumers cancelling service in favor of more affordable over-the-top video services and free-to-air broadcast, NPD said.

"Cord cutters" primarily say they cut their subscriptions because of economic considerations. According to information from NPD's recent "Digital Video Outlook" report, 16% of U.S. households do not currently subscribe to pay-TV services.

"Much-needed structural changes to the pay-TV industry will not happen quickly or easily," Nissen said. "However, the emerging competition between [subscription video-on-demand] and premium-TV suppliers might be the spark that ignites the necessary business-model transformation of the pay-TV industry."

Still, most consumers prefer a one-stop-shop for TV entertainment, according to NPD surveys, with 59% of pay-TV subscribers preferred having a single provider compared with 21% who desired multiple providers and 21% who expressed no preference. Meanwhile, 62% of subscribers would like premium TV services delivered by their pay-TV provider directly or from a service affiliated with their pay-TV provider.

NPD's "Digital Video Outlook" report is based on quarterly electronic surveys of about 1,000 consumer households in the U.S., as well as on the firm's semiannual surveys of 10,000 consumers.