You may have noticed that there has been a flood of anti-cord cutting stories recently. Last weekend, The Boston Globe joined in with a front-page story called “Internet TV catching up to cable—on price.” As you would expect, many of our readers reached out very upset with what they felt was a one-sided story.
So, today, we want to release our rebuttal to that story.
Cable TV Also Went Up This Year
The short take away from this story was that Hulu, YouTube TV, and DIRECTV NOW all went up between $5 and $10 a month this year. Yet, The Boston Globe completely ignored the fact that cable TV also went up. Comcast just went up $10 a month in many markets. Spectrum raised their fees including jumping their Broadcast TV fee from $8.85 this time last year to $11.99 a month.
On average it has been reported that cable TV customers are paying between $5 and $10 a month more this year than last year. That means the average cord cutter who has DIRECTV NOW, Hulu with live TV, and YouTube TV is saving about the same as they did last year.
No one likes to see a price hike, but this idea that only cord cutting is seeing price hikes is just untrue. It is also not realistic to say there will never be a price hike. Sling TV, for example, has only had one price hike in three years. Compare that to once and sometimes twice a year price hikes on base packages and fees from cable companies and you can see why cord cutting is still a better deal.
Let’s also not forget how the advertised price for cable TV is not the price you pay. New customer set-up fees, broadcast TV fees, regional sports fees, HD technology fees, device rental fees, DVR fees, the list is long of ways cable TV finds additional revenue on top of the price they advertise.
Most Cord Cutters Don’t Pay for Sling TV, DIRECTV NOW, YouTube TV, Hulu, etc.
When you read stories like the one from The Boston Globe, you would think most cord cutters pay for live TV streaming services. The truth is there are between 30 and 35 million cord cutters but only 7 million subscribers to live TV streaming services.
When you look at the largest on-demand streaming services you will see the prices have remained mostly unchanged over the last few years. Yes, Netflix went up $2, but Hulu went down $2 a month meaning the big three of Netflix, Hulu, and Amazon still cost the same as they did a year ago.
The best part is Netflix, Amazon, and especially Hulu have dramatically expanded their lineup of content without a dramatic change in price. Yet when you read The Boston Globe story you find very little mention of the fact that most cord cutters don’t even bother with a live TV streaming service. Some do, but mostly only seasonally, like when they want to watch football.
Even If Cable TV Stopped Raising Its Price It Would Still Take Nine Years for Cord Cutting to Catch Up
Let’s play devil’s advocate here. Let’s say cord cutting continues to go up $10 a month every year, and cable TV decides that they will never raise their prices again. How quickly would cord cutting prices catch up to cable prices?
In 2018, it was reported by the research group cg42 that the average cord cutter saves $85 a month. (There have been other studies that suggest that the savings could be as high as $100+ every month, but let’s use the lower number for this argument.)
With a price hike of $10 a month every year on cord cutting and no change in pricing for cable TV, it would take eight-and-a-half years to catch up in pricing and nine years before cord cutting costs more than cable TV.
For that to be true Comcast, Spectrum, AT&T, and others would have to agree to stop raising their prices for the next nine years. One thing we know about cable TV is the fact that prices always go up.
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