Eighty-three percent of American households have cable, and the average cable bill is $100 a month, a 40 percent increase over the last five years. But more and more are opting to cut the cord and go without, and a growing segment (the terribly named “cord-nevers”) have never had cable at all.
These cord-cutters and cord-nevers make do with streaming services like Netflix, Hulu, and Amazon Prime, and instead of a set-top cable box they have a Roku, an Apple TV, or a Chromecast.
Should you go cable-free and live an all-streaming lifestyle? It’s not an easy question to answer.
Before the streaming services became content producers (Netflix with House of Cards and Orange Is The New Black, Amazon with Transparent), this was a somewhat simple question: How do I watch all my favorite shows without a cable subscription? But now, even a cable subscription isn’t enough to get access to everything you might want. Choosing just one thing, streaming or cable, means giving something up.
For someone who wants it all, streaming services may simply be supplemental to an existing cable subscription, and thus, they may not save you any money at all.
Someday, we may be able to pick and choose the channels we want, either via a cable subscription or streaming services. Right now, however, there are a host of financial and legal incentives keeping that from happening.
What’s Ahead:
ESPN is the glue keeping cable packages together
The dream of a consumer-friendly cable market, where customers can choose the channels and content they want a la carte for a reasonable cost, is far off and may actually be impossible.
If you subscribe to a standard cable package, a pretty significant part of your bill is for ESPN, regardless of whether you know a field goal from a first down.
ESPN is so expensive because they have to pay out major money for the rights to the most sought-after professional and college games. In 2012, ESPN signed a deal for a reported $5.64 billion for 12 seasons of college football, or roughly $470 million a year. And that’s just one league in one sport.
ESPN accounts for about $6 of any monthly cable bill, which means you’re paying about $72 a year to subsidize the viewing habits of sports fans. It’s sort of like the individual mandate, but for watching 200-pound dudes give each other concussions. For any of us to do it, all of us must do it. (It’s a metaphor—don’t email me.)
ESPN can’t offer a streaming-only service because not enough people would pay for it
ESPN doesn’t want to “unbundle” from larger cable packages because they fear, somewhat reasonably, that the number of people they would gain from offering a stand-alone streaming service would pale in comparison to the people they’d lose. If that happened, then the cost of the stand-alone streaming service would have to go up, probably by a lot. One analyst estimated that a stand-alone streaming ESPN would cost $36 a month. Right now, the sports network is only available outside the cable cabal as part of Sling TV, a streaming service which costs $20 a month (and most of that $20 goes to pay for ESPN), and includes other standard cable channels.
While ESPN is the most expensive cable network, it’s not the only one that would get prohibitively expensive as a stand-alone service. Would you want to pay $8/month for TNT? Or $5 a month for The Disney Channel? Both of these channels cost little more than a dollar per month as part of a standard cable package.
Cable companies can’t exclude ESPN from their basic packages or they’ll get sued
Cable companies are trying to respond to customers’ desire for more customization. But, again, ESPN is the black fly in their customized cable chardonnay, as the sports giant’s agreements with cable companies prohibit those companies from putting ESPN on any sort of “premium” tier. Like I said, we all have to (theoretically) watch sports, or none of us get to (actually) watch sports.
Last year, Verizon FiOS announced plans for Custom TV, a plan that would allow customers to get access to a basic suite of cable channels, and then add on additional bundles to get a total set of channels better suited to their personal tastes. ESPN was not included in the basic suite of channels. ESPN sued Verizon.
Verizon revamped the program, and now Custom TV is not so customized. Rather, there are two options: one, Sports & More, which has ESPN and another, Essentials, which doesn’t. Essentials also has significantly more channels.
(Update: Verizon and ESPN have since settled the lawsuit, and the ESPN-less Essentials lives on. Perhaps there is hope!)
Cincinnati Bell has just rolled out a customized TV plan, called MyTV. For $30 a month, subscribers get 38 channels, and can opt for “genre-specific add-on bundles.” ESPN is included in the $25 “Essentials” add-on (a contradiction in terms if I ever saw one), along with TNT, TBS, Fox News, and Cartoon Network. No word yet on whether ESPN plans to sue Cincinnati Bell.
Another recent option that still offers ESPN and is significantly cheaper than cable is DirectTV Now, DirectTV’s new internet-streaming option. They offer a few bundles starting at $50 a month, which includes 80+ channels. Other bundles include the $60 a month plan that overs over 100 channels and the $70 a month bundle that offers over 120 channels.
Regardless it’s clear ESPN—and parent company Disney—are not going down without a fight. ESPN’s plummeting numbers (they lost 3 million subscribers this year, and 4 million last year) are such a threat to Disney’s bottom line that, even in light of the massive success of Star Wars: The Force Awakens, its stock still took a dive in December.
Content providers want to get paid, and cable pays them more
Streaming is not necessarily less complicated, however. There are different services, different devices, and some channels are simply not available for streaming—unless you already have a cable subscription. Cable’s strange financial incentives spill over into the streaming market.
These channels aren’t available for the same reason ESPN doesn’t want to un-bundle from cable packages: while nice to have, they’re not really strong enough to stand on their own, and offering stand-alone streaming options, even as a supplement, encourages more people to defect to an Internet-only TV existence. For every person who cuts the cord, content providers lose carriage fees (or the amount a cable company pays to carry a channel).
Thus basic cable stalwarts like Lifetime, TCM, and BBC America are unavailable to stream unless you have a user name and password from a qualified provider. If you wanted to watch the recent War & Peace miniseries on Lifetime (and I definitely did) then you either needed a subscription yourself, or you needed to borrow someone else’s password. (I fortunately have many family members still in thrall to Big Cable.)
Hulu, a joint streaming venture from ABC, Fox, and NBC, allows viewers to watch the most recent episode of a current show the day after that episode is aired. This makes it a lot easier to keep up with new stuff without a cable subscription. Last month, the Wall Street Journal reported that Time Warner, Inc (not to be confused with Time Warner Cable, which is a separate entity) was interested in buying a 25 percent stake in Hulu, with the express purpose of curtailing next-day access to new episodes, in the hopes of funneling viewers back to the providers’ own streaming sites—that require a cable password—or to buying episodes on demand from Apple or Amazon.
And while, over the course of a year, buying a few seasons of a television show outright may still make financial sense compared to a pricey cable subscription, that doesn’t mean that shelling out $30 per season won’t sting. It’s strange to pay outright for something you’re used to getting for (what feels like) free. Cable packages, while expensive, feel like you’re buying access to an almost endless amount of stuff. Buying one season of television feels like buying access to one season of television, and to a season of television you don’t know if you’ll ever want to watch again.
Other content, like local broadcast networks, award shows, and big sporting events, are also often unavailable, unless you have a digital TV tuner. (Which you can buy for not that much money.)
Streaming also changes the way you watch TV and how you find out about new stuff
There’s also something else I miss about cable. It isn’t a particular show or a particular channel. Rather, it’s that sense of happenstance you get when flipping through the channels, when you stumble upon a great old movie on TCM you’d never have known about otherwise, or find an old episode of a sitcom you loved when you were 14 playing on TBS or TV Land. It’s like how browsing in a bookstore or library you’re exposed to things you might never even have thought about, much less searched for.
The Internet, in theory, offers those same opportunities, as anyone who’s fallen down a Wikipedia k-hole knows very well. But the Internet, and streaming services, are focused on searching rather than browsing. And to search means to know what you’re looking for.
It’s possible to watch most of the shows you want without cable these days. But it’s much harder to find out about new shows. Algorithms do what they can, but they often deliver up more of the same, rather than something radically different but still appealing.
Would I be willing to pay $100 a month to get this sense of serendipity back? No.
Summary
Streaming is an (often) low-cost alternative to a pricey cable subscription. But we’re currently in the midst of an awkward, piecemeal transition in home entertainment, and financial incentives and legal restraints keep either streaming services or cable subscriptions from giving customers the exact selection of channels and shows that they want.