Among the safest predictions anybody can make is that each new year will bring price hikes for subscribers to video entertainment services. It doesn’t look like 2012 is going to be any exception. Time Warner Cable price hikes

But it is fair to say that all the providers will be raising prices. It just happens virtually every year. Comcast price hikes

The logical outcome, one might argue, is that customer defections, in the form of outright “cord cutting,” are going to grow, which roughly mirrors what has been going on in the broader service provider business since the mid-1990s, namely that each contestant in a market has to sell more products to a smaller number of customers.

Video entertainment subscriptions are perhaps analogous in another sense. User demand has been changing, with more demand for mobility and broadband products, with somewhat less demand for fixed-line voice products and slightly-less demand for fixed-line video subscriptions. 

At some point, one has to wonder whether the continual price increases are going to drive so many more customers out of the market that distributors and programmers alike are forced to change their policies.

To at least some significant degree, the annual price hikes are driven by programming cost growth, in particular the practice programmers have of bundling packages of their own networks. Basically, programmers bundle a “must have network” with other lightly-viewed or growing networks as a “take it or leave it” package.

A frequent tactic is to require contracts to carry lightly-viewed new channels that do not have high or significant viewership as the requirement for getting rights to show highly-popular channels such as ESPN (News - Alert), for example.  Channel bundling

How sustainable that model is, as prices continue to climb, is the issue. To be sure, it will take far greater customer resistance than now is seen to drive a serious change of behavior on the part of both distributors and content owners. Current distribution will change, some day

It would be one matter if end user costs climbed in line with inflation, but video programming and video subscription costs have risen at far above inflation for quite some time.