Hein moved to New York City on a tight budget and
without a TV. When she and her roommates finally got
one, chipping in for cable on top of a $50 utilities
bill per roommate just wasnít feasible. So she opted
instead to subscribe to TV streaming services like
Netflix and Sling TV.
the cord, she said, "was very liberating."
cable and satellite TV is a decision thatís
increasingly common ó 1 in 7 Americans is a cord
cutter and an additional 9 percent have never had a
cable or satellite TV subscription, according to Pew
Research Center. In the first three months of the year,
cable and satellite services lost about 762,000
subscribers, about five times as many the same period
last year, according to research firm MoffettNathanson.
the average monthly price of cable or satellite TV
hovering around $100 in the U.S., cutting the cord can
save consumers hundreds of dollars each year.
is, until they start subscribing to streaming
cutting has been heralded as a consumer-friendly
revolution that lets audiences pay only for the content
they enjoy. But as the market becomes more crowded and
competitive, itís uncertain whether digital-only
services will necessarily prove less expensive than the
cable and satellite services theyíre quickly
much is clear already to customers who rely on multiple
streaming services, such as Hein, who wound up
subscribing to Sling TV, Netflix, CBS All Access and
is how Iíve been getting my cable jones for about a
year now," she said. "But it was also a hefty
subscription to hang on to."
predicament isnít unique, according to Ian Olgeirson,
an analyst with the Kagan division of S&P Global
seen consumers complain about spending but at the same
time have ramped up their spending," he said.
more than 130 streaming services (also referred to as
over-the-top services), a hodgepodge of sticks and boxes
such as the Roku streaming stick and Googleís
Chromecast for viewing on television sets, and cloud
DVRs, thereís no shortage of products tailored to a la
staples such as Netflix and Amazon Prime Video have
thousands of movies and television shows available at
any time, as well as original shows. At just a few
dollars a month, they helped drive many to digital
alternatives and continue to attract both cord cutters
and pay-TV subscribers alike.
offerings such as Sling TV, PlayStation Vue, DirecTV Now
and the recently announced Hulu With Live TV are growing
in popularity. With base rates around $20 to $40 a
month, they aim to replicate the live-TV viewing
experience with dozens of channels in real time.
recently, live sports programming was nearly impossible
to watch without a cable-TV subscription. But now sports
fans can get their fix through add-on packages via Sling
TV, for $45 a month, and fuboTV, which starts at $14.99
addition, there are numerous niche services like
Crunchyroll, an anime streaming service, for $6.95 a
month; Acorn TV, dedicated to British content, for $4.99
a month; and Curiosity Stream, a documentary platform,
for $2.99 a month.
these services are far less expensive than cable-TV
packages. But for viewers whose favorite programs arenít
covered by a single streaming provider, the costs can
going to see consumers who look at those packages and
realize a smaller package is going to ultimately not
hitting all buttons they want to hit," Olgeirson
said. "Weíre entering a phase of more choice but
not one in which consumers have ultimate leverage."
leverage would allow customers to pay for just the
programs they like: say NFL Football, "House of
Cards," local news programming and Nickelodeon. But
for now, that could require purchasing an antenna and
subscriptions to DirecTV Now, Netflix and PlayStation
because of what telecommunications analyst Craig Moffett
calls the value chain. Studios make shows, which are
bundled to networks, which are bundled to media
conglomerates, which are bundled into a broad package
from a cable or satellite provider.
people talk about unbundling Ö they mean unbundling
individual networks from each other," Moffett said.
"Customers find it frustrating that selecting
individual networks is not one of their options."
on top of subscription costs, thereís that pesky
to analyst Bruce Leichtman at Leichtman Research Group,
in 2016 the average cost for pay-TV service nationwide,
including plans bundled to broadband and sold on their
own, was $103 per month. And according to Kagan, the
price of internet access only, without pay TV, was
$52.29 per month in the first quarter of 2017.
hypothetically, if a cord cutter pays the average rate
for an internet-only package and subscribes to Huluís
live-TV service ($39.99 per month) and YouTube Red
($9.99 per month), theyíll pay $102.27 ó saving 73
cents per month compared with the average pay-TV bundle.
Throw in Amazon Prime Video ($8.99 per month) or any
streaming sports service and cord cutting becomes the
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not hard to find a streaming mix that matches or exceeds
the average costs of cable. And streaming prices could
rise in the future.
broadband rates donít appear to be rising
substantially as a whole, thereís a chance that cord
cutting could someday lead providers to increase monthly
internet bills to mitigate the loss of cable customers,
according to a MoffettNathanson report.
a strong correlation between the amount of video
consumed and the internet speed that consumers think
they need, providers could possibly upsell customers on
costlier broadband packages. They could also increase
price of unbundled internet or simply raise prices for
Trump administrationís efforts to walk back net
neutrality rules ó potentially allowing internet
service providers to offer priority treatment to certain
websites and services ó could also make streaming
products more expensive.
these rules, cable companies will be free to degrade the
video quality of any streaming service they
disfavor," said Joshua Stager, a policy counsel at
the New America Foundationís Open Technology
could push customers into costlier services.
providers, Stager said, "could also force streaming
services to pay onerous access fees ó fees that would
almost certainly be passed on to consumers."
a risk to all streaming services," Sling TV Chief
Executive Roger Lynch said.
a risk: price hikes due to the scarcity of the very
content that makes streaming services so popular in the
Hulu and Amazon have helped usher in another golden era
in television thanks to their ambitious shows such as
"Orange Is the New Black," "The Handmaidís
Tale" and "Transparent." Theyíve
sparked a demand for high-quality and imaginative
storytelling that studios are eager to fill.
shows, however, arenít cheap or easy to make. Despite
studiosí efforts to ramp up production, thereís a
chance that demand for such programming from streaming
services and TV channels will outstrip the supply from
studios ó potentially raising costs.
competition between streaming services could rein in
some price hikes, if costs go up across the industry,
expect the viewers to be the ones who foot the bill.
of cost aside, the cord-cutting trend is only likely to
accelerate. Emarketer estimates that cord cutters and
cord nevers (people who have never subscribed to pay TV)
will grow from 51 million in 2017 to more than 66
million by 2020.
count Hein among that number. After seeing her combined
internet and streaming bills climb to about $112, the
31-year-old, who works in digital media, made a call to
a cable company, which offered an internet and cable
bundle that was $20 more per month than what she was
paying as a cord cutter. The cost was greater, but so
was the convenience: No longer would she have to futz
with different apps to find her favorite shows.
a recent Friday, she began the transition back to cable.
said, sheís not ruling out subscribing to streaming
services. Hein said sheíd happily shell out for a
channel dedicated exclusively to the "Law &
canít believe we arenít there yet," she said.
"I would pay real money to subscribe to that."