The Economics of Watching TV

We’re the proud owners of a new TV. And I feel like we earned it. Our neighborhood had a community garage sale and we spent days going through every room, one of which was a “closet annex,” and got up an hour before sunrise (both of us are anti-morning people) on a cold Saturday morning to face scores of bargain shoppers. The net result of this was a stack of cash that paid for a Samsung LN-S4695D 46″ 1080p LCD HDTV. Despite the exhaustion of a long day, Saturday night we hoisted the new TV upon its perch and I fell to my knees before it (to start knotting the inevitable cable spaghetti behind it) amid a chorus of groans and popping joints.

It started a month earlier when I had the brainstorm to sell our old TV at the upcoming garage sale. With that one gone, we’d be forced to buy a new one. We’ve been living with that rounded-front, CRT-based TV for about 4 years and, while it was a decent set, we were missing out.

When shopping for a new TV, most people will need to go through the five stages of grief as a result of sticker shock. Good quality TVs, especially HDTVs, are not cheap and while there are cheap models, the trite but true “you get what you pay for” consumerism mantra has clear consequences when adopting a TV into your home. Here are some things to think about when buying (or justifying) a new TV.

1) TVs are hard to buy and harder to get rid of. Given the expense of TVs, most people hold on to a TV for several years (if not decades) and will be resistant to frequent purchases. TVs depreciate quickly and, in my experience, it’s difficult to recoup much of your investment in a two year old TV.

2) Bigger is not always better or more expensive. Size matters, of course, but there are many other factors to consider. A set that is too small in one room can be too big in another. The resolution of the TV has a great influence not only on price but also on viewing pleasure: a resolution that is too low is hard on the eyes, but excessive resolution is hard on the wallet. Carlton Bale’s detailed analysis of screen size vs. viewing distance vs. resolution is an essential read before you get too far along your selection process.

3) Garbage in, garbage out. One of the biggest factors in my selection process was the collection of inputs each candidate TV offered. More than half of the columns of the spreadsheet I created detailing each contestant were related to the inputs. I spent a lot of time thinking about what sources I currently had, which ones I knew were impending (so perfect that the Apple TV is coming out a week or so before my birthday!), and considering what else I might want to connect in the future. Chances are, skimping on HDMI inputs on an HDTV will lead to future sadness.

4) Seeing is believing. We had the opportunity to see several of the “short list” candidates at local stores. It’s difficult to compare sets in different stores, but if any happen to be nearby in one store, the relative quality of each can be observed. While not the optimal environment, the internal speakers can be tested, too.

5) Pay as much as you can. This seems like an awkward thing to recommend, but I feel it’s a reasonable guideline. It pains me to see people watching a 30 year old TV. It actually hurt me to hear a family member brag about snatching up a deal on a super-cheap display-model TV from a local electronics store. Why?

Lets look at the economics of watching TV. Working under the assumption that you are a cable or satellite subscriber, you are probably paying between $50 and $100 a month (US Dollars) for the service, maybe more with premium or HD channels and other digital services. At $100/month, programming for your TV costs $1200/year. Over a reasonable lifespan of 5 years for a new TV, this programming will cost $6,000. It pains me even more that my family member will probably keep her “new” $200 used TV for at least 10 years, probably paying $10,000 to watch it.

Lets take it a little further:

Cable/Satellite programming $75/mo $900/yr
Tivo service $15/mo $180/yr
DVDs $20/mo $240/yr
Video games $25/mo $300/yr
Total $135/mo $1620/yr
Total over 5 years   $8100

Paying $8,000 over the life of a TV provides some perspective on the difference between $300 and $3000 TVs.  These numbers make some assumptions like buying or renting $20 worth of DVDs per month or buying a new video game every other month. There are other uses for TVs and different people emphasize different usages. Chances are you can add and subtract values from this table, but unless you only use over the air broadcast signals and don’t own a DVD player or video game console, you spend a good bit of money feeding your TV. Keep this in mind the next time you find yourself trying to justify that extra zero at the end of a TV price tag. It will also help when getting up really early in the morning to sell your unwanted junk (or spare organ) in the name of entertainment.

  • davak

    You are quoting all my research I did for you! You B!

    Actually, every good blog post about high-def TVs should use Bale’s image.

    The money spent feeding the TV is an excellent point that I never really thought about.

    My one additional gem…

    Most people who I know who do not like high-def television do not like the way *standard* definition programming appears on their new set. Most cable systems have more standard definition channels than high-def. Because of this, most people will still watch standard-def at least 50% of the time.

    If your standard def looks horrible, you are not going to be happy. Good sets will make standard def look good.

    If you can’t find a store that will show you everything you want to know, just look around the avsforum. Those guys know 10 times more than any normal user would ever need to know.

  • qmchenry

    Oh yeah, stole all my research from you. :-)

    Great point on the standard def on a high def set. Funny how they don’t have low res video on display in the stores, isn’t it? It would definitely be worth asking to see some standard definition. In my area, we have the potential of getting eight whole HD stations, so other than an upsampling DVD player (which is only technically HD although looks *awesome*), the vast majority of what I’ll be watching is SDTV.

    One note: I’m an engineer, not a businessey-person. In fact, the engineering center at CU Boulder is right next to the School of Business. There was always some animosity between the two camps fueled, at least in part, by the fact that they got to enjoy Boulder’s social scene while we got magnetic key cards to let us into the 24 hour labs. Which we used. A lot. Anyway, I’m not an economist, so please forgive any improperly used economistic terms.

  • J

    Or you can save a ton of cash by not owning a television or having cable.

  • freda

    I like watching tv, the most important thing for me is the clarity of tv.

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