One of the things we measure at TDG is how consumers perceive the value of services they use. In early 2010, we checked on what value consumers felt they were getting from their PayTV subscription relative to what they were spending. The results were not good: 43% considered their service poor value for money.
And so we come to Comcast's quarterly results. The company reported 1.3% year-over-year increase in video revenue: a good result in tough times. Even better when you consider the company actually lost 238,00 video subscribers over that same period. Comcast is extracting more revenue from fewer subscribers. How much more? Video ARPU (average revenue per user) increased by a spectacular 4.4% to $75.12 a month.
Between 2010 and 2011, inflation has varied from 1.6% to 3.6% per year. Comcast video subscribers have seen their monthly video bill increase between 0.8% and nearly 3% above annual inflation. This is bad news when you consider that inflation adjusted median household incomes have been falling consistently over the last 10 years (5% in the period 1999-2009.)
To be fair to Comcast, the company is simply reflecting the dynamics of the entire industry. However, it illustrates clearly why consumer value perceptions of PayTV are bad and getting worse. One can only wonder how long ARPU increases can sustain revenue growth as consumers continue to flee in search of better value.
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