Why cord-cutters aren't really saving money

Disney and Walmart are the latest streaming services to tempt our wallets.

As Disney prepares to launch its own streaming service late in 2019 (one that you can bet will be loaded with Star Wars, Marvel, Fox, and other Disney original programming), it has rekindled questions about cord-cutting behavior and just how much money consumers are really saving.

During the summer of 2011, I wrote the book, Social TV. It was during a time when the promise of "TV everywhere" was pretty nascent and constrained by limitations in both technology and content – not to mention legal issues. Back then, "cord cutting" was an extremely niche behavior, as one study found that only point-one percent of Americans had gotten rid of their pay TV service altogether.

Fast forward seven years: it’s estimated that by the end of 2018, the total number of U.S. adults who will have cancelled their pay TV service, to date, will be 33 million. This means that 13 percent of Americans no longer have traditional pay TV service. But are they really saving money?

One of the greatest (and, as it turns out, fiscally challenging) things to have happened to "television" over the past couple of years is the meteoric rise of streaming (OTT) subscription services. While many of them share some of the same third-party TV shows and movies, each are offering a growing lineup of their own original programming. In fact, some of the most coveted and award-winning series increasingly exist outside of traditional network and cable TV. This means consumers need to pay a portfolio of streaming providers in order to watch their "first-party" content. And it adds up quickly.

Let’s just scratch the surface here: Of course, there’s Netflix with its suite of originals, like Stranger Things, at $10.99 a month. If you want to watch Game of Thrones (and who doesn’t?!), you’ll pay another $14.99 a month for HBO Now. To access originals like The Handmaid's Tale on Hulu (with no commercials), you’ll have to shell out $11.99 a month. And to watch a personal favorite like Star Trek Discovery (including Jean-Luc Picard’s return to Trek), you’ll need to subscribe to CBS All Access for $9.99 a month. That totals $47.96 per month.

But it doesn’t end there. Do you want to watch the Karate Kid revival Cobra Kai? That’ll cost an additional $12 a month for YouTube Premium. This fall, DC Comics is launching its DC Universe streaming service for $7.99/month, with exclusive originals including Teen Titans and Young Justice. And when Disney launches its streaming service later next year, you’ll likely want to subscribe to that too, bringing the total monthly subscription costs to around $80.

Since you need a high-speed internet connection to actually stream all of this programming (without the plague of buffering), you’ll need to add about another $75-100 to your monthly fees, for a max total of $180 per month. And if you want to stream sports, news, and network/cable programming, you can add on another $40-50 a month for an OTT live streaming + DVR service like YouTube TV, Sling TV, or Hulu Live. Now you’re spending over $200 per month. How does this compare to your existing cable/internet/satellite bill?

There are many additional streaming services I haven’t even mentioned (including one that Walmart is planning to launch as well as Apple’s foray into original programming) that will inevitably tempt us to spend even more money. Knowing this, is cost-savings really the motivation for cord cutting? Or is it something more?

Here’s the thing: While cost (saving money) is an important factor for the millions of cord-cutting, cord-shaving, or cord-never consumers out there, the actual user benefit (value) of these services is a deciding factor that will continue to tip the scales in their favor. And it all comes down to the quality of content and the ease at which its accessible.

OTT consumers are getting access to programming that’s simply not available through their pay TV providers (although many are hustling to bundle Netflix into their offerings). They’re benefiting from a truly seamless "TV everywhere" customer experience. And all of the above streaming services, at the price-points mentioned, are advertising-free (except for the live OTT television add-ons, which each come with a DVR feature for skipping ad interruptions). This is great for consumers while bad for advertisers.

Although not yet perfect, streaming TV has come quite a long way in enticing the masses to finally cut the cord. If you’re one of the many that’s finally ready to do it, just don’t expect to be paying much less than you’re paying now. In some cases, you might actually be paying more – It’s merely the price of admission for the à la carte TV everywhere utopia we’ve all been clamoring for – and the lure of original programming is just far too tempting not to click "subscribe" and pay.

Mike Proulx is the chief digital officer at Hill Holliday. 

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