Can cutting the cable cord really save you money?

Can cutting the cable cord really save you money?

Given the recent news that HBO, CBS, and Lionsgate are launching stand-alone streaming services, you may be thinking that the time is ripe to cancel your pay-TV contract and save lots of money. For years, consumers have been asking for à la carte television that lets them buy individual channels or networks without paying for broad packages of content they don’t want. It seems that à la carte TV may be finally arriving.

October 22, 2014 2:45 PM

Given the recent news that HBO, CBS, and Lionsgate are launching stand-alone streaming services, you may be thinking that the time is ripe to cancel your pay-TV contract and save lots of money. For years, consumers have been asking for à la carte television that lets them buy individual channels or networks without paying for broad packages of content they don’t want. It seems that à la carte TV may be finally arriving.

The question is, though, will it really save you any money?

Maybe not, especially if you want to continue watching the major broadcast networks and you’re unable to get free over-the-air signals using an antenna. The savings will shrink or disappear entirely for those who want to access a lot of cable shows, or sports fans not content to only watch the big games from their local teams. The more programming you want, the more individual streaming services you’ll need to purchase, and the more quickly your bills will add up.

Cutting the cord, but maybe not the bill

Right now, we don’t have the details about how much these new online services will cost, with the exception of CBS’; it will cost $6 per month for the CBS All Access streaming service. Should the other major broadcast networks hop onboard by offering streaming versions of their channels, we expect they’ll be priced similarly, say $5 or $6 each month.

HBO and Lionsgate—in conjunction with Tribeca Enterprises, which runs the Tribeca Film Festival—haven’t announced pricing for their services, which are supposed to launch in 2015. But we’d be surprised if HBO costs less than $15 to $20 per month, which is what cable customers typically pay. And the price could be higher for streaming if HBO is eager to protect its current relationships with cable companies. This all means that if you only get the four major networks and HBO, you’ll already be paying
$40 to $45 each month.

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Streaming may make the most sense for those who tend to watch network TV and can receive over-the-air signals using an antenna. Since the major broadcast stations will be free, you can pay $20 each month for HBO online and augment that programming either with a Netflix subscription—$9 per month for new subscribers—or a $99-per-year Amazon Prime subscription, which works out to about $8.25 a month. In this scenario your total cost would be a little more than $37 each month. Of course, you’d need to pay for decent broadband service—and the price for that could rise if you currently have a bundled deal tied to a TV programming package.

But it gets a lot more complicated—and expensive—for those with different TV-viewing tastes, and who can’t get free over-the-air TV. For example, if you’re a fan of the ever-growing assortment of original cable programming—yes, “Walking Dead” and “Honey Boo Boo” watchers, we’re talking about you—streaming deals, if offered, might not work out better financially. Say you can’t, or don’t want to, get free TV using an antenna: You’ll pay $24 each month just for broadcast TV. Add in $20 a month for HBO, plus a $9-per-month Netflix subscription, and the monthly amount comes to $53. Not too bad. But if you’re also hooked on of some of Amazon Prime’s new original series, such as “Hand of God,” or “Red Oaks?” you can add another $8.25 to your monthly TV service bill. And you still won’t be getting popular cable stations, such as AMC (“Walking Dead”), FX (“American Horror Story”) USA Today (“WWE Raw”), HGTV (“House Hunters”), Food Network (“Chopped”), Bravo (“Real Housewives”), or
TLC (“Honey Boo Boo”). What if you like all these shows? It’s not hard to imagine your monthly TV bill shooting to $80 or more. Starting to seem very cablelike, isn’t it? And that doesn’t even include any sports programming.

That’s right, sports fans. Don’t laugh at those “Walking Dead” addicts—the prospects are even worse for you if you choose to cancel your cable TV subscription. Let’s say you sign up for CBS’s streaming service: You’ll find it doesn’t include any National Football League games. Do you like ESPN? Right now that’s still only available via pay-TV subscription. (ESPN will reportedly be part of a new streaming service from Dish Network when it launches.) Even if it does go the à la carte route, there’s been speculation that it could cost as much as $30 per month as a stand-alone option. At about $6 per month, ESPN is already the largest single chunk of your cable bill. But its cost is essentially being subsidized by every cable company subscriber, not
only viewers who actually want it. Most analysts say they believe ESPN will cost significantly more if it’s offered debundled from a package. When they add up the costs, many viewers could find that it’s more economical to retain their basic TV package—even if they don’t like their cable company—and then supplement that with one or two additional streaming services.

Why streaming services could help cable customers

Most of this arithmetic is based on speculation about where prices will end up. But one thing that’s virtually guaranteed is that we’ll see more streaming options in the next 12 to 18 months. Sony has already announced its intention to offer a pricier cloud-based service, and last month it reached a deal to carry about 20 Viacom channels, including Comedy Central, MTV, and Nickelodeon. The satellite TV company Dish Network, which owns Blockbuster (and the Blockbuster@Home streaming service), is also working on a TV-over-Internet service that will include programs from Disney and A&E Networks, plus ESPN, thanks to a deal it reached in March.

Sony appears to be taking a cablelike approach, creating a larger, bundled package of content that will be priced similarly to a cable TV package. Dish seems to be looking at creating smaller tiers of programs, priced below what cable currently offers. According to published reports, both these companies will be looking to bolster their programming lineups beyond the deals they already have before launching their services. But both look more like online-based cable networks, not à la carte services.
Even television viewers that stick with their cable companies could benefit from the heightened competition. One consequence of the new streaming-only deals could be that cable, satellite, and telco TV service providers (Verizon and AT&T) start demanding lower fees for programs that are now also available elsewhere. That scenario might translate into lower rates for traditional pay-TV service. And while the cable companies aren’t likely to introduce their own à la carte offerings, they could very well start offering cheaper, more targeted programming packages based on narrower viewing interests. That’s something many consumers would welcome. We’ll continue to monitor all these developments, so keep checking back for our updates and
advice about finding the best programming deals. If you need more information about antennas and over-the-air reception, make sure to read our free articles on the best indoor antennas and getting the best reception.

—James K. Willcox

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