Did you know that your current TV provider doesn’t actually want to sell you TV programming? That’s right, they don’t want to sell you TV programming because it is not very profitable for them. We know that this seems ludicrous but it is true. Take a look at the chart by the Kagen group, one of the leading analysis firms specializing in the television industry.
As you can see in the chart above, the profit margins on video have been in decline for a long time. But how can this be? If your TV prices have gone up every year, how is it possible for these companies to actually be making less profit per user on TV every year? That is the trillion dollar question.
Who To Blame?
Of course, we don’t want you to feel bad for these companies…their customer service has been awful and their services are prone to strange blackouts, but we think a little understanding will go a long way. These companies are raising your rates because of the rising cost of buying the programs from the people who create them. So, if you want to be angry at raising rates, then blame should first be laid at the feet of the content creators.
Who are the content creators you should be mad at?
This list of companies produces most of the shows you watch via broadcast and cable networks. These enormous media conglomerates charge more and more every year for their content and many smaller cable and satellite providers are often stuck in the middle. Your TV signal provider knows that you, the end customer, will not tolerate even larger rate hikes to cover the full cost of rising programming costs. Of course, it is no surprise that two of the largest cable companies and the largest satellite companies (Comcast, Time Warner and AT&T’s DirecTV) are also in the TV show creation business. Its more profitable if you make and sell the content yourself.
The preceding is an excerpt from our white paper that explains TV pricing and the history of cable TV. To download this fascinating paper please send an email to [email protected].