On Wednesday, Hulu finally announced its $40 per month live TV streaming service. And with 50 channels of live TV, the aptly-named Hulu with Live TV, is just one more reason you should fire your cable or satellite TV provider — a task some 762,000 subscribers undertook in the first quarter of 2017, according to analyst Craig Moffett. That’s great news if you care about customer choice, also known as having a functioning and competitive marketplace.
Unfortunately, you are also likely to see bogus arguments claiming streaming TV services like the Hulu’s don’t actually represent a fundamental break with cable and won’t save you much money. Here’s why those claims are simply wrong.
It’s still a bundle of channels, not à la carte
This frequent complaint — see, for instance, this November Wall Street Journal piece — makes a legitimate but unimportant point. Whether you sign up for Sling TV, Hulu’s new offering, PlayStation Vue, YouTube TV or any other live-TV service, you probably wind up paying for some channels you don’t want.
But the amount of money you pay and the number of unwanted channels you get should both still be lower for streaming services than what you’d get from cable or satellite.
At Comcast (CMCSA), for example, the “Economy” TV bundle — starting at $60 a month when bundled with 25-mbps broadband and HBO — includes more than 100 channels. But since those don’t include ESPN and AMC, among many other name-brand channels, you’ll probably need to pay an extra $10 for a package with the “Starter” bundle of 140-plus channels.
At DirecTV, the floor is even higher. The AT&T (T) subsidiary’s $50 “Select” bundle packs in more than 150 channels.
Dish Network’s (DISH) service Sling, meanwhile, includes just 30 channels in the basic $20 per month Sling Orange bundle. DirecTV Now’s $35 starter service bundles 60-plus channels. YouTube TV—note that this $35 per month Google (GOOG) service is only available in a few cities—includes 40 channels. And the Sony (SNE) PlayStation Vue service doesn’t make you buy more than 45 or so channels in its $30 per month basic tier.
So, yeah, it’s a bundle, but it’s less bloated and better balanced.
It costs almost as much as a cable when you add up all the different services
A November Bloomberg Businessweek story provides a typical example of this argument by suggesting that a cord cutter would need to sign up for Netflix (NFLX), Hulu, Sling, Amazon (AMZN) Prime, YouTube Red and HBO Now, for a total monthly cost of $71.21.
It’s true that online TV services each have their own gaps. Some don’t have Comedy Central. Some don’t include local channels. Some have exclusive content you can’t get elsewhere, Netflix being the canonical example.
Comcast’s pricing, for example, punishes internet-only subscribers by turning the $40 monthly rate for a 25 Mbps connection to $75 after the first year — Hulu’s service, already on the expensive side, may not save you any money unless you watch it on multiple TVs.
But most of the time, you can cover your bases with just two or three services. In my case, we pay for Sling and Netflix, for a total cost of $29.99. We also watch the occasional show on Amazon Prime — but the real reason we pay for that is the service’s free two-day shipper. Our local channels are free via over-the-air broadcasts.
The lack of contracts in online-TV services also allows you to sign up for one, binge-watch a favorite series, then drop that service.
But wait, there’s more — all the add-on fees with cable or satellite. With Comcast, for example, “Broadcast TV” and “Regional Sports” fees add another $9.95. An HD tuner is free for the first TV, but a DVR will run $10 a month extra — and adding a second TV incurs a $9.95 “HD technology fee” and a $5.99 rental fee for a second box.
Traditional pay-TV companies are strangely reluctant to mention these fees. I have probably received 100 pounds of flyers in the mail from Comcast and Verizon (VZ) touting their TV offerings since we cut the cord in 2009, and I can’t recall any of these promotional mailings breaking out their add-on costs.
And the promotional rates you usually see generally rise after a year unless you’re consistently good at threatening to quit the service if they don’t keep that discount in place. That $60 Comcast price I quoted jumps another $15 a month, while the DirecTV rate ascends to $90 a month.
Don’t forget the cost of the broadband service you need
“It still requires internet service from a cable or telco provider” was one of the lines questioning Sling TV’s chances in a January 2015 Variety piece. I see this all the time, and it is by far the silliest objection to online TV.
Broadband is pretty much a requirement of modern life at this point. Suggesting it’s an extra we’d only get for online video is like writing a recipe that warns that you’ll need to pay for electricity or gas.
It is true that many cable companies price standalone internet service to minimize your savings compared to taking a bundle of internet and TV service. It’s also true that many people don’t like their cable company, so continuing to pay them for one service can feel like a form of defeat.
But the lack of competition in American broadband is a much deeper problem than the pricing details of TV and internet services, and it’s not something you’re going to be able to fix yourself—especially not when Washington acts like that’s not really a problem.
But saving money by cutting the cord is something you can do on your own, and it will probably be easier than you think.
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