From the department of obvious conclusions: Research firm Kagan reports that people are cutting the cord because cable TV is far less affordable than it used to be. Since 2000, the average cable, satellite, and telco TV bill is up 74%, from just under $60 per month then to nearly $100 per month now. Meanwhile, median wages have remained more or less flat. This has created a larger “affordability gap” between consumer income and the cost of cable TV.
“The eroding legacy multichannel affordability partly explains the popularity of over-the-top services such as Netflix Inc. and Amazon.com Inc.’s Prime Video,” Kagan said.
Last year, the top pay TV providers lost a combined 1.5 million subscribers according to Leichtman Research Group. Those that are betting heavily on streaming video, such as AT&T, are making up for those losses with online alternatives, but streaming bundles are cheaper and less profitable than cable and satellite TV. It turns out that when there’s lots of competition in the pay TV business, the “affordability gap” magically shrinks.