Recently, there’s been a lot of attention surrounding the topic of cable TV “cord cutting,” or the process of forgoing one’s cable television in favor of over-the-top (OTT) streaming media services like Netflix and Hulu, which are capable of offering instant access to premium selections of on-demand media.30
As we mentioned in one of our previous blog posts, many cable television customers are cutting the cord with the intention of saving money. What these customers are finding, however, is that in many cases cutting the cord is much more expensive. By the end of 2015, for instance, the average cost of pay-TV and premium services will cost about $123 per month. By 2020, this figure will skyrocket to about $200 per month.
Further evidence to support this claim can be seen in a new Gizmodo article that sheds light on Apple’s new TV subscription service, Apple TV. Widely speculated to be released as soon as this fall, Apple TV will most likely offer access to about 25 channels of basic cable including network heavyweights like ESPN, Fox, ABC, CBS and FX. It will most likely cost $30 to $40 per month.
As a standalone package, Apple TV sounds like a good deal. The reality, however, is that consumers will get a limited selection of content. Movie fans, for instance, will still have to fork over an extra $8 per month to access Netflix, Hulu or Amazon Prime. HBO Now, for that matter, fetches $15 per month. Add up all of the disparate channels and it becomes apparent that cord cutting does not produce any sort of tangible cost savings if you expect to receive a full suite of digital media on a regular basis.
Will consumers continue to support pay-TV models as the prices continue to rise? It remains to be seen; however, you can bet on the fact that this trend will continue for the foreseeable future.