Real wage increases were microscopic in 2017 -- against higher consumer price inflation. What does this mean for consumers' monthly entertainment costs?
Perhaps more looking into the media space -- especially with more free over-the-air TV space and free internet content. Cord-cutting of pay TV packages won’t go away in 2018.
The U.S. Bureau of Labor Statistics says real average hourly earnings increased 0.2% from November 2016 to November 2017. In the same year, inflation was 1.7% higher.
Looking longer term, after adjusting for inflation, wages are only 10% higher in 2017 than they were in 1973 -- with annual real wage growth just below 0.2%.
Consumers continue to do the math; home entertainment consumption is a key focus.
In 2018, many pay TV operators will be hiking monthly fees. For example, Comcast's X1 Starter Triple Play package will increase by 3.3% to $155 per month; its Premier Triple Play will rise 2.4% higher to $215 monthly.
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Similar moves from other companies, depending on the package, are coming: Charter prices are rising 7% to 8%; Cox is going up 2.5% to 6%; DirecTV will increase 3% to 7%; and Dish Network will rise from 3.5% to 7%.
Much of this is due to changing overall business dynamics. One estimate from MoffettNathanson Research says traditional pay TV subscribers -- cable, satellite and telco services -- lost a collective 3.1% in 2017, with nearly 900,000 subscribers in total.
Outside the home, there have been similar increases. In 2017, the average movie ticket price, according to boxofficemojo.com, rose 3% to $8.93 a ticket, with 6% fewer tickets (1.21 billion) sold versus 2016.
What remains? Although many media/entertainment analysts crow over the idea that consumers will spend more of their paychecks on entertainment -- with newer inexpensive digital video platforms available, as well as free Internet content -- that is expected to change.
Media disruption came with new businesses over the past few years -- a reaction to slowly eroding consumers looking for cheaper alternatives.
Small paycheck gains, even with some expected tax savings later this year, will make that glaringly evident.
It would be instructive to know what percentage of the overall bundle increases are due to cable nets negotiating higher "per sub" fees.