This week, Consumer Reports published a story on their website and in the September 2019 Consumer Reports magazine called “The Cord-Cutting Decision Is Tougher These Days. Here’s What You Need to Know” by James K. Willcox.
This story used many of the same attacks that the March 2019 cord cutting story used, but they made some new mistakes we want to address. We are going to break down what Consumer Reports got wrong.
In the story, when breaking down the cost of streaming versus cable TV, Consumer Reports claims that streaming costs $103 a month and cable TV costs $102. According to the story, when you add together YouTube TV, HBO Now, Amazon, Netflix, Hulu, and Disney+, you will pay more than cable TV.
Now we could argue that according to Fortune the average cost of cable TV for just TV is $107 a month, so even with the package listed above you would save money, but we have a better argument….
One mistake in the article is arguing that cable TV would give you everything the streaming package does. For example, HBO is listed as a cost of cord cutting but not a cable TV cost. Yet if you want to watch HBO with cable TV you still have to pay $15 a month extra. (Once that promotional rate is over.)
Consumer Reports also used the most expensive Netflix package that includes 4K but ignored the fact that most cable TV companies do not offer 4K and if they do they have a fraction of the content Netflix offers.
Even listing Disney+ is misleading because YouTube TV also includes the Disney Channel at its $50 price point. Disney+ offers content you won’t be able to get from your cable TV company.
In short, Consumer Reports fails to recognize that content from Disney+, Hulu, HBO Now, Amazon, and Netflix is content you can’t get with cable TV. This is why most cable TV subscribers also subscribe to at least one streaming service. The author fails to recognize that most cord cutters do not subscribe to five streaming services.
Consumer Reports goes after cord cutting for the fact that cord cutting services like YouTube TV, PlayStation Vue, and DIRECTV NOW are going up in price, but it fails to point out that cable service prices are also increasing. In the last year alone the average cable TV customer has seen their prices increase between $5 and $10 a month. And, just recently, Fios raised the cost to rent its DVR box to $24 a month.
When you look at the side by side price hikes of cable TV and cord cutting you will see that many cord cutters are saving the same, if not more, this year as they did last year. This is because most cord cutters do not pay for a live TV streaming service. At last report, there are over 35 million cord cutters but only between 7 and 8 million live TV streaming service subscribers.
In conclusion, any argument looking at the costs of cord cutting versus cable TV cannot list HBO as a cost exclusive to cord cutting. You also can’t talk about cord cutting price hikes without mentioning cable TV price hikes.
Did you cut the cord? Leave us a comment and let us know how much you are saving.
Update James Willcox sent Cord Cutters News a rebuttal to our rebuttal that he asked we run:
Hi, Luke, thanks for the chance to respond. But I would like to correct what I feel is a somewhat regular mischaracterization of our articles about pay TV and streaming services. Consumer Reports has very much been an advocate of cord-cutting as a solution for consumers who for too long haven’t had a choice of TV providers. We have a whole section of our website dedicated to the topic of cord-cutting (https://www.consumerreports.org/streaming-media-players-services/cord-cutting-guide/) and numerous articles (Video Streaming Services That Let You Cut Cable TV) to help consumers make the jump.
In addition, for years we’ve taken cable TV companies to task for poor customer service and a lack of transparency in what the total cost will be for consumers. (https://www.consumerreports.org/fees-billing/how-to-avoid-cable-tv-sneaky-fees/) For example, we created the “What the Fee!” initiative to highlight the hidden cost of fees for consumers in various industries, including cable and telecom, credit cards, hotel and airline bills, and student debt. We have a whole advocacy team in Washington pushing the FTC for greater regulatory enforcement over these practices, and lobbying to get better consumer-protection laws passed.
In regard to the specific article you mentioned, it was part of a larger package outlining the current choices for consumers, and letting them know that the math involved in cord-cutting is changing. We’re not saying that traditional pay TV service is a better deal; what we are positing is that because of recent price hikes, the calculations of how much money you can save is changing. Also, because more media companies are launching their own services, they’re letting content licensing deals with other services expire and keeping their shows and movies for their own services. That means that more consumers will be subscribing to multiple services, at an additional cost.
The comparison chart you mention (Streaming vs. Cable) was simply a graphical way of showing that for those who will subscribe to multiple services, it’s not too hard to reach cable TV-like pricing. We used the higher-priced Netflix plan mainly because it supports more users, not necessarily for the 4K, since Consumer Reports readers typically have families and may want more simultaneous streams. However, in hindsight I do wish we pointed out that even if you did spend the same amount of money, with streaming you’d likely not only get more content, but a greater number of shows and movies you really want to see. You’d have more control.
As for the average monthly traditional pay TV bill, I used the $102 number from S&P Global/Kagan rather than the $107 number from Leichtman Research Group. Though I have used the latter number in some instance in the past, I chose not to for this article because Leichtman number includes those subscribing to cable-style streaming services in addition to traditional pay TV services. S&P Global’s estimate only includes pay TV service from cable, satellite and telcos, and it was just updated, so it seemed more relevant and a better choice for this article. (The difference is only $5 a month in any event, and both are estimates.) For the record, S&P’s actual numbers are $102.45 a month, or $1,229 annualized.
As far as rising prices, every year I cover pay TV price increases (https://www.consumerreports.org/tv-service/cable-tv-fees/) as well as streaming increases when they occur. We do regularly cover the topic, and we think that many consumers are aware of the steady rise in cable pricing over time. That’s one, well-known reason that interest in cord-cutting has been on the rise.
Anyway, thanks for allowing me to respond, and keep up the good work. Just be aware that Consumer Reports is always in favor of more consumer choice, and that’s certainly true for TV service. Now if we can only get that to happen with broadband.
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