Is Cord Cutting No Longer A Value Proposition?

(I am sending this to my special sub group of clients that cut traditional pay TV about 18 months ago and went with Hulu’ Live TV offering; I am also sending this message to a few others who have talked about cutting the cord or found other ways of doing so). 

So the one thing I wanted to say is — THE COST OF CONTENT IS GOING UP.  There are very few power brokers in control of all of this content.  A layman’s explanation of it would be something like this.   CBS:   Viacom / Paramount (and all of their channels),   Comcast:  NBC, NBC Sports, USA Network, etc.,  then don’t forget Disney — ABC / ESPN, and of course ATT — Time Warner / HBO.   There is also the Fox kingdom as well and all of their outlets. 

So let’s say you are the cable company, the satellite company, Hulu Live TV, You Tube TV — you have to make deals for all of that content.  And if you are the content provider, you cut  your deals with each service.   Do you think the prices are going down?  Of course not.   With more people staying  home perhaps for a very long time or forever, with sports being held without spectators, could those prices be going down?  NEVER.   Content deals are often described as $ per customer.   It would not surprise me if with some services that ESPN is getting paid $5 per customer.  You can see how this all adds up. 

Comcast / Xfinity is less likely to cut deals with their customers, except for brand new customers.   Hulu Live TV raised its prices to $55 last year.  You Tube TV raised its prices to $50 last year, and they admitted based on all of their content deals that at that rate they were only making $1 per customer per month.   You might ask why would they even bother being in business for a $1 profit per month?  The reason is Google owns You Tube and they can afford to be a disruptor.   Well, now it’s the customers who are feeling a little disruption.  You Tube TV announced that they are raising prices to $65 per month.  The good and bad thing about no contracts is — the price can go up any time, but the customer is free to leave at any time.   I would not be surprised if Hulu Live TV raises their prices soon, but maybe not.  We’ll see. 

As you can see the value proposition of the live TV replacement services isn’t quite what it used to be.  There are other choices besides Hulu + You Tube TV — although those 2 are widely praised for being the best.    There is ATT TV Now ( formerly DirecTV now).  Their base package is $55 per month.  Then there is Sling TV.  You may have seen their corny TV ads.  They are priced lower, but offer fewer channels. 

Now I know some of you have chosen to go with an antenna for free TV and other free options like CBS News Network (which is a free streaming channel).  Those may work out.  The price is right. 

Then you have to factor in all of the on demand streaming services like Amazon Prime Video, Netflix, and Disney Plus.   This could all get very expensive, but it could all be very meaningful as we are enjoying our content at home more.  Amazon Prime Video just launched a new feature where you can watch their stuff with other people in a “party” format at different locations.  I think that’s really cool.

So ultimately, I just want you to be aware   — 1) content isn’t cheap,  2)  the streaming services are disruptors to the entrenched cable companies and they can’t operate in the red forever if they want to stay with us, and 3)  you are likely not tied down by long contracts, so be free to hop around and try different options.