Cable and satellite television services are the single biggest entertainment expense for American households. And that spells trouble for the industry.
In 2010, the average household spent $621 on cable/satellite television services--53 percent more than in 2000, after adjusting for inflation. Average household spending on this category increased 2 percent between 2009 and 2010 alone, despite an 8.5 percent decline in overall spending on entertainment. Cable/satellite services now rank 18th among the categories on which the average household spends the most, up from 33 in 2000.
The cable/satellite industry has gotten too big to get away with this much longer, turning itself into a target for budget-cutting consumers and lower-priced competitors. A recent Harris poll shows a large share of households looking for ways to cut their cable bill. Twenty-one percent have cancelled or cut back on cable spending in the past six months, and another 22 percent considered cuts. With alternatives to cable/satellite services now emerging, the industry is headed for a haircut.
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