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Live TV arrived online this year, and it’s going to cost you.
The introduction of the first, legitimate Web-based television services happened in 2015. These new options stream live television channels. They include Sling TV from Dish Network and Vue on Sony’s PlayStation game console. These services are meant to be the final nudge that disgruntled pay-TV customers need to cut the cord.
But “cord-cutter” is a misnomer. A consumer who kills off a cable or satellite subscription in favor of online alternatives still needs a cord to the Internet. Combine the price of connectivity with subscription fees for online video services, and the total tab quickly vaults over the average cost of pay-TV. Breaking down prices of online options shows that those reviled cable and satellite companies still tend to provide more bang for each buck.
The average monthly cost for a standalone broadband Internet plan in the US was $69 in 2013, according to the Federal Communications Commission’s latest report this year. That’s within spitting distance of the average price for a “double play” plan that includes Internet and pay-TV. On average, US households paid $85.20 for both TV and connectivity in 2013, the FCC said.
The high price of broadband by itself means a single subscription to $20-a-month virtual-television service like Englewood, Colorado-based Dish’s Sling TV is enough to push the average cord-cutter into the red zone. That means paying more money after cutting the cord than before.
Web-based TV services like Sling and Tokyo-based Sony’s Vue, which starts at $50 a month, tend to have gaps in their channels. Sling, for example, lacks broadcast networks. To make up for that kind of hole, cord-cutters have a la carte online options. With these standalone virtual services, programmers have taken the first steps to letting viewers cherry-pick favorite channels, but that tacks on more costs.
With channels available a la carte, “Comcast isn’t going anywhere, and you’re not going to be paying less,” said Ali Yurukoglu, a professor at Stanford University who has studied the economic effects of bundling channels together. “The hope that cable is going to go the way of Tower Records and Blockbuster is unfounded.”
If you want to watch most ABC, NBC or Fox shows on your big TV or your phone, an $8-a-month Hulu subscription is in order. Anyone who wants to watch the breadth of CBS online owes $7 each month (just don’t count on that price to include NFL games for now). Can’t live without premium cable fare like “Game of Thrones” or “Homeland”? Online HBO runs you $15 monthly, and streamers must pay $10 a month for Showtime.
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Add those all add up, and it’s another $40 every 30 days or so.
Online-only services like Netflix only push the tab higher. Netflix raised prices this year to $10 a month for new subscribers. Hulu and YouTube are free if you watch ads, but stripping commercials away costs $12 and $10 each month, respectively. Amazon Prime’s $99 annual bill breaks down to $8.25 a month to watch its streaming video catalog.
Some cable companies are offering small, cheap bundles aimed at people who aren’t interested in traditional pay-TV. Comcast’s Xfinity Stream product is an Internet-only TV service that offers HBO and the major broadcast TV networks, live and on-demand, for $15 per month on top of the price for standalone broadband service. But the hope of these deals, ultimately, is to “upsell” a customer to a full-blown pay-TV package.
The price of broadband remains the wildcard in any cord-cutting calculation. Though the FCC tabulates averages every year, prices vary widely by area and provider.
If you do decide to cut the cord, be prepared to pull out your calculator.
