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Breaking the bundle could lead to higher TV bills, says study

Cutting cable cord
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It's been a watershed year in the fast-changing media landscape, capped off by the launch of DirecTV Now in November, a slimmed-down streaming bundle starting at $35 per month.

But despite a growing array of content choices presented to consumers, a new survey from PwC found that cord-cutting isn't happening as quickly as expected, and intent to stick with the bundle is actually on the rise.

Even more surprising, the study found that more than half of consumers who trimmed or shaved down their TV bundles are actually paying more now for content then they were last year, thanks to the cumulative cost of over-the-top services.

The study, which sampled more than 1,200 U.S. consumers, found that customers were cutting the cord at a lower-than-expected rate.

Among respondents, 76 percent were pay-TV subscribers in 2016, down from 79 percent last year. According to PwC, "while we continued to see a dip in traditional pay-TV subscribers this year, we didn't see the surges in cord-cutting that many expected."

Among pay-TV subscribers, 84 percent expected to still be subscribed next year, up from 70 percent in 2015. PwC found that "access to sports programming and variety of content" were the main factors driving subscribership.

As for those consumers who have trimmed down their cable packages, for example individuals who have elected to switch from more expensive to less expensive cable bundles, the survey found a majority ultimately ended up paying more for content.

"Apparently, trimming the cord did not save them money, likely because they added costs of streaming services or paid apps," PwC said. "This indicates they are willing to pay extra for a more streamlined or focused experience on where they find value."

Curated bundles of on-demand services can become pricey, as consumers essentially create a custom bundle of their own. For example, a customer who subscribes to Netflix, Hulu, Amazon Prime, CBS All Access, HBO Now and Showtime, all over-the-top, could easily spend upward of $50 per month, and that doesn't include the cost of broadband.

Add to that the cost of a slimmed-down TV bundle like DirecTV Now or Sling TV, and the total could easily surpass that of lower-tier offerings from traditional players.

In its quarterly cord-cutting report, research firm MoffettNathanson found that pay-TV losses for the third quarter were "only a tad worse than last year's," echoing the trend found in PwC's study. But MoffettNathanson called DirecTV Now "the market's most important litmus test yet."

Indeed, the next year will be a key test of the resilience of the bundle, as the expected launch of streaming options from the likes of Hulu and YouTube give consumers even more options.

Correction: HBO Now is the network's over-the-top service. An earlier version misstated the name.