Cord-Cutting: Does it Really Cut Costs?
It’s been more than a decade since “cord-cutting” entered our vocabulary. The term refers to consumers who have canceled their cable TV services and rely on Internet streaming video services such as Netflix, YouTube, Amazon Video, Sling, Hulu, over-the-air broadcast TV, or some combination of the above. The promise of cord-cutting was “big savings.” But have those savings materialized? Let's do the math -- read on... |
Will You Save Money With Cord Cutting?
The answer is yes, perhaps, or maybe not. It all depends on your list of "must haves" when it comes to channels and content. If you go with an "internet-only" plan, and add Netflix, then you'll have lots of movies to watch, but you might be missing your favorite shows on ABC, CBS, NBC, FOX, ESPN, CNN, Comedy Central and other channels in your cable provider's lineup.
At $30 a month, SlingTV's "Blue" package is cheaper than most cable packages, and includes 50+ popular channels. In 2016, a consumer who switched from Comcast’s average cable TV bill to a service like SlingTV saved a nifty $20 per month. But in 2017, despite new competition from providers like DirecTV Now, Hulu and YouTube TV, the average consumer was saving only $16 per month. In 2018, it was a break-even proposition, and by the end of 2019, things were moving even further in that direction. Those numbers come from M Science, a research firm that tracks consumer transaction data.
When the cost of Internet access, streaming TV packages to get all the channels the family wanted, and home telephone service was added to the average consumer’s monthly bill it actually became $15/month more than the equivalent services delivered via a cable subscription. How did the promise of lower costs become a cost increase? The answer lies with both the incumbent players and their upstart challengers.
The price of “raw” Internet access from a cable company keeps going up, even faster than overall cable package prices. Comcast, Cox, et. al., want to sell you a bundle of services -- the classic “triple-play” of Internet, TV, and phone service. They offer lower prices for the bundles they want to sell, and raise the price of standalone Internet service.
If you insist on cutting all but Internet from your bill, you may find its price soars until it’s barely ten bucks less than the price of the triple-play. Add Netflix, Hulu, and other must-have streaming services, and you’re soon paying slightly less to your ISP but significantly more overall.
The cost of programming is the lion’s share of all viewing options’ prices. Sports, America’s most expensive addiction, is often what keeps families tied to cable TV, or pushes the cost of cord-cutting above the cost of staying tied to cable. ESPN is the biggest culprit; its top 4 channels - ESPN, ESPN2, ESPNU, SEC Network - account for more than $9.00 of the average monthly cable bill. The Fox Sports family - FS1, FS2, Big Ten Network- costs a combined $1.86. The standalone NFL Network is the only other sports channel that costs more than a dollar per month. And these show up as mandatory charges on your bill, whether you watch those channels or not. These stats are courtesy of SNL Kagan, a media and communications market research firm.
Another factor is that the streaming services are raising prices as well. One might have predicted that as their customer base expands, costs would go down. But that hasn't happened. Since late last year, prices for Sling have gone up $5/month; Hulu with Live TV bumped up $10/month; AT&T TV Now raised prices by $15/month. YouTube TV launched at $35 per month, increased the price to $40 in March 2018, and raised it again to $50/month in April 2019. The companies blame rising programming costs as the reason for the increases.
Going A la Carte
Unlike a typical cable TV package, you may have to shop around to find a combination of providers that offer all the content you and your family want. Some services offer a mix of news and entertainment, while others focus on sports and family shows. One may have your favorite TV shows, but not your preferred news outlet.
If you use a Roku box to stream to your television, there are quite a few free channels that may satisfy your content craving. The Roku Channel offers hundreds of popular movies, as do Crackle, Pluto and TubiTV. If you subscribe to Amazon Prime, there are lots of movies you can watch for free on Amazon Video. Amazon also produces quite a few original and highly-rated TV series.
Saving money is not the only reason people cut the cord. The ability to buy a smaller bundle of channels and customize it with a la carte channels to suit one’s viewing tastes is very appealing to some. So is being able to watch one’s favorite shows on a variety of screens, not just the big one in the living room.
Still others are attracted to the deep libraries of old movies offered by the likes of Hulu. Finally, there are new generations of viewers who are “cord-nevers,” people who grew up with mobile entertainment and can’t imagine life any other way.
Are you a cord-cutter? Tell me which combination of streaming services satisfies your family's viewing needs, and how it compares to the cost of cable. Post your comment or question below...
This article was posted by Bob Rankin on 26 Jun 2020
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Most recent comments on "Cord-Cutting: Does it Really Cut Costs?"
(See all 38 comments for this article.)Posted by:
keller christian
26 Jun 2020
prices are going up because we have no one in our government to help with price gouging. they all work for big business,that is how they become millionaires in less than a year after being in office
Posted by:
Larry Kaplan
26 Jun 2020
At the end of the day, it's just not worth the effort to cut the cord. I get the basic package from DirecTV, which is bundled by AT&T with my high-speed internet (I work from home). It gives me the channels I want at a reasonable price, without a lot of energy going into figuring out which service to get.
Posted by:
Gene Martin
26 Jun 2020
I cut the cord 15 years ago. After all, how many times can you watch "Law and Order" reruns with tons of commercials. At that time, just the cable/satellite was about $80.00 per month.
Amazon Prime (with Acorn) and Netflix does the job for me. I also READ BOOKS! Do I miss it? Not at all!
Posted by:
Jackie Kittle
26 Jun 2020
I cut the cord several years age when my cable/phone/TV went to $155 a month. I have a cell phone anyway and Amazon Prime for my family and shipping anyway, got CBS All Access for the local station and Star Trek Discovery. My basic Internet was $44 at the time I cut the cord. Now it has crept up to $69.99, CBS is 6.05, and Prime about $20 a month. I'm OK with that.
Posted by:
wrigleywrat
26 Jun 2020
Had xfinity TV with internet, paid $285/mo. Had netflix ($13/mo) since 2008 and amazon prime ($10/mo) since 2012. Total $308/mo as of 1/1/2020. Cancelled xfinity TV, but kept internet for $98/mo and added hulu with disney+ for $13/mo. New total $134/mo, savings of $174/mo (56.5% reduction) Awesome.
Posted by:
john
26 Jun 2020
Bob - Your article and the reader feedback clearly point to a follow on article - the best way to source internet service for us frugal types.
Some people (like me) only want a data connection. Unfortunately I live in the Philadelphia metro area where Comcast has a service monopoly. No competition means $$$$! Verizon refused to install new DSL to my residence. I need better than dialup access for my business from home.
What are the other options. Sarah L's feedback mentioned a multifamily building program. Can one buy and resell bandwidth (I live in a 64 unit condo association.) What else is outside the box?
Oh, and to get content, I have a big TV antenna in my attic, get 40+ channels and use a TIVO DVR to watch or avoid ads as I choose.
Posted by:
Michael Lane
26 Jun 2020
Many years ago we tried to go 'a la carte' when we wanted to add the Disney channel. We were told that the Disney channel came bundled with the Playboy channel and we could not get one without the other.
Brilliant marketing to sell you stuff you don't want!
Posted by:
Lulu
26 Jun 2020
I cut the cord two years ago, kept internet service and use VUDU and Kanopy for streaming movies (both free unless I rent a recent release).
When my internet renews, I use Trim to negotiate the terms.
Posted by:
Bob K
26 Jun 2020
I have nothing but ROKU, and I am happy. I can get local channels on Roku through Locast for free. I've always had internet, so it's not an additional cost, and with that I need nothing more, as I am not a huge TV fan anyway. Often 2 or 3 weeks go by without turning on the TV.
Posted by:
Gordon
26 Jun 2020
The best bundle for quality TV in cost as well as variety and talent and superb programming is Britbox. While we also have Netflix we never watch it compared to Britbox which we get through Roku. Britbox is quality British TV and cheaper than Netflix. Maybe because I am Canadian and thus able to understand British humor does help but the mysteries as well as humor are worth it. We stopped watching anything else
Cheers.
Posted by:
Beau
27 Jun 2020
This is off the subject: A few days ago you recommended the Google Internet Researcher course. This is an excellent course, and Dan Russell is a terrific instructor. I learned a lot. There is a "BUT" It was indicated that upon satisfactory completion, with a passing grade, I'd receive a certificate. I did the course passed with a 5/5 score, but there was no place to submit my score, therefor no certificate. I thought to avail myself of the training to attempt to freelance in the market. No certificate, no chance.
Posted by:
Jim
27 Jun 2020
I used to go back and forth from Comcast to DishTV until about 4 years ago when I became a "cable-cutter". We're about 30 miles from the Nashville metro area and we get about 32 OTA channels. We pay about $94/mo for AT&T internet and phone (120Mb speed). And we pay another $21/mo for Philo (57 great entertainment channels). Plus with a Roku you can watch all the archives of the individual Philo channels on their own separate Roku channels. For example the Food Network Roku channel alone has 1000s of shows in their archive and they are all available to watch through the Philo subscription. Of course, Roku has dozens more channels with plenty of free TV like PlutoTV, the Roku Channel, TubiTV, etc. I'm a news junkie, so CBSN, SkyNews, RT, France24, AlJazeera, DW (and more) are great Roku channels. For certain programming, I have found excellent websites that are not available on Roku. So between OTA, Roku and my laptop all plugged in to my big screen TV, all my live TV watching needs are met for less than $120/mo (and the phone accounts for about $40 of that).
Posted by:
Lawwill
27 Jun 2020
I'm in the UK and we have the excellent Freeview and Freesat options which give us all the terrestrial channels and much more for free. I still have a Virgin TV and Broadband subscription with a TIVO box and I keep toying with the idea of giving this up but the hassle of reprogramming all the devices which use the Virgin broadband connection has prevented me from doing so so far. However as Virgin gets more and more expensive I will probably disconnect from it sooner rather than later - or at least perhaps just keep the broadband and lose the TV options
Posted by:
Joe
27 Jun 2020
Have cable internet-100 @ $30/mo.Bought approved modem & router last year($150)-so no more rental fees. Have Netflix ($10) and locast w/o their ads ($5.50) since poor antenna reception - With Roku and magic jack -almost all set!
Add Wyze security camera, wi-fi thermostat, google mini, alexa and myfit watchbands and it's starting to feel like the 21st century. Loads of choices and ongoing cost around $60 when you factor it over long term. Can't get much better than that.
Posted by:
Joe
27 Jun 2020
Forgot to mention Kanopy and Hoopla (via roku)-free with library card and prepaid smart phone($30) many free apps available. Can find lots of news, more movies etc. with laptop -use VPN and Brave and duck duck go browser for privacy and less ad tracking. Don't stop looking for more ideas.
Posted by:
Ken Green
27 Jun 2020
My current cable/non-cable is as follow: I use a DVR for recording any off-the-air some 42-44 channels at no cost.
Living in a senior building, I can get free channels from 2 to 12. For an addition $27, I can get an additional 48 channels from 25 to 73.
Actually, I usually tune to the local network stations. When getting poor reception from OTA, I use the in-house system as an backup.
Posted by:
Becca
28 Jun 2020
Just want to say that I am 77 yrs young and cut the cord about a year ago. I have Roku, and love it! I was already an Amazon Prime member, so I don't consider that a cost. My internet is through a phone co. with a for-life price at half my cable internet cost.
Except for prime I do not pay for any channels. I don't have time to watch all the free things. I'll have to save them for my old age!!
I really enjoy your newsletters. Thank you.
Posted by:
Larry Petz
29 Jun 2020
Last year our son surprised us with a 65" smart TV. One of the apps it came with was Sling TV. Looked good so we signed up. Got an OTA antenna, cancelled our Dish Network. BIG mistake. Did not realize Sling used the internet to watch their programming. My internet package comes with 1000GB usage per month. Before Sling TV I was using an average of about 200GB per month. With Sling TV that jumped up to close to 900GB used in 3 weeks. Any overage above 1000GB would cost me $10.00 per 1000GB. Needless to say we dumped Sling TV and re-signed up with Dish Network. So cord cutting did not work for us. Do your research before you cut the cord.
Posted by:
Vulcan
30 Jun 2020
I dropped Cox cable TV and just kept the internet as it's either them or Centurylink here in Omaha, and Cox higher speeds are far less expensive and faster for the money!
Went to Hulu and just used the WiFi which is 6 feet from the Firestick Live new stick, so strength was very good.
Hulu is buggy, freezes now and then, drops a channel now and then, and requires removing power now and then to reset. The remote and it's actions are wonky at best.
All I saved was about $26 a month and got a troublesome Firestick/Hulu combo.
Thing is once your first year plan at Cox is done, YOU MUST CANX their tv package for a month or more IN ORDER TO come back as a fresh customer to quality for the much lower pricing -- as they jack your pricing year two.
It's a racket, this cable business. They gotcha. So the Firestick/Hulu is useful to use for that time frame to reset pricing at Cox.
I'm very computer literate and can operate my Firestick/Hulu easily. It's just buggy. Might be better on a TV with the built-in ap.
Posted by:
Cody
02 Sep 2020
I was paying XFINITY $212 monthly (TV, internet, and modem rental). I bought my own modem on AMAZON (saved 14 buck a month), bought an antenna (also on AMAZON-$20), and subscribed to "fubo". My XFINITY bill is $77 (for now) with 200 Mbps internet.
"fubo" is about the same price, with a couple of add-ons. I do not watch regular TV just sports. The only important channels missing on "fubo" are ABC (college football) and PBS. I have the antenna to cover those. As far as sports, the coverage is overwhelming good, especially soccer. One worrying caveat is that I used 1 TB of data my first month. I will be more prudent this month and not leave streams going unwatched. Hopefully I can enjoy the changes that I've made without a Grinch (data usage) coming to take it all away.