Rising production costs and increased competition for talent and sports rights mean some viewers wanting to see the latest hit TV shows are now faced with bills of up to £100 a month for packages bundled with broadband and phone lines.
The rise has been driven by the increasing cost of television, with the explosion in channels and streaming services such as Netflix boosting competition for sports rights, programmes, writers and stars.
The new services, which offer shows any time and on any device, give consumers more viewing choice than ever before – but at a price. The top packages from Sky, Virgin Media and TalkTalk, which include all the best shows and broadband bells and whistles, all now cost more than £1,000 a year.
According to the media regulator, Ofcom, the average revenue per user made by TV companies has “increased as pay-TV subscribers have taken up more premium products”.
The most recent figures show that BT’s overall average revenue per user has grown 7% year on year to £404 a year. Sky’s has increased from £504 four years ago to £574, while Virgin’s is £588 a year – up 2% year on year.
To watch all Premier League football matches, plus shows such as Game of Thrones, House of Cards and the former BBC drama Ripper Street, consumers need to subscribe to Sky Sports and BT, Sky Atlantic, Netflix and Amazon Prime Instant Video, respectively. Buying just those TV services directly – without them being bundled with any packages that include broadband or telephony – costs about £792 a year, or £839 in high definition. That is on top of £145.50 a year for the BBC licence fee.
As with car or home insurance, consumers are having to shop around frequently and use price comparison websites to get the best deals, with the fragmented market leaving some confused.
Charlotte Davis, of the comparison site Simplify Digital, said a lot of customers were bewildered. “There are so many things to take into consideration, especially with certain things like six-month half-price offers. Viewers need to be aware of offers that expire halfway through the contract.”
She said that Simplify Digital also received “a lot of questions about what programmes are in the packages” as viewers try to find the latest and most popular content.
Although over the past decade the average spending on pay-TV services per household has remained about the same at about £40 a month (adjusted for inflation), TV companies are “upselling”, so individuals are also buying more premium online services such as Netflix or better broadband.
An Ofcom spokesman said many viewers had “experienced real-term price increases for certain packages. At the same time, the choice of pay-TV offerings has expanded, with new high-definition, 3D TV and online TV services.”
Some viewers find they have lost track of how many subscriptions they are paying as they join new providers such as Amazon Prime Instant Video to watch specific programmes.
The choice of services to subscribe to has exploded within the last decade. New technology means options range from Sky’s Now TV service for those who do not want a Sky TV contract to accessing channels and on-demand shows without a satellite via YouView through a contract with TalkTalk or BT.
Sports rights and drama production costs have risen, as providers’ ability to bring in large audiences and create so-called “event television” such as Kevin Spacey in Netflix’s House of Cards has become a valuable commodity.
The BBC’s director of television, Danny Cohen, said: “Costs are rising. It’s probably true that it is different for different genres, such as sport. These are inflationary pressures.”
But Cohen said another reason for the rise was that there was “such a hunger to get the best people. I’m bound to say this I guess, but when you look at £600 or whatever, £145.50 a year is phenomenal value.”
Virgin is trying to simplify things by including Netflix free for six months and including it and BT Sport as part of its billing so viewers do not have to pay separate bills.
Virgin Media’s chief operating officer, Dana Strong, said the company’s bundles “deliver unprecedented value as standard and can be perfectly tailored to our customers’ needs”.
On the issue of sports rights, Virgin is also challenging the current Premier League auction mechanism. As Enders analyst Toby Syfret points out: “As the European country with much the highest rights fees per game, much the fewest televised top league games, highest package prices and by far the biggest outlay on player wages, the current PL auction mechanism gives the UK consumer little cause for cheer.”
Viewers finding themselves paying more should consider switching and bundling their services – buying broadband, telephony and TV together – to save money and simplify bills.
Davis said: “Now is a really good time – there are some very competitive packages to get people to install before Christmas.
“If you’re savvy you can get a really good deal. When it gets to February prices will start to go up again.”
She also said consumers should be aware that new Ofcom rules “ensure consumers can leave contracts during their minimum-term contract if the price changes unexpectedly”.
A Sky spokesman commented: “From just 70p a day, we offer great value TV packages and a range of options that can keep the whole family entertained for a month for the price of one night out.”
He added: “Following the emergence of internet TV services, viewers now have more choice than ever. That’s a good thing for everyone.”
Rapid advances in technology and opening up the television market have increased competition and given viewers more choice but they are, literally, paying for it.
