This week, Netflix announced a $2 price hike and, as you would expect, big media companies jumped at the chance to bash cord cutting. First, NBC News quickly released a story called “The Bundle strikes back: How streaming caught up to cable TV prices.” In this story, NBC News (which is owned by Comcast) argued that streaming costs as much as cable TV. Now CBS is doing the same using their ZDnet website pushing the exact same argument with the same errors NBC made.
In this story, Steven J. Vanghan-Nichols argues that cable TV and cord cutting are now the same price. As you will find they ignore three things. First, the advertised price for Spectrum TV of $85 he used did not include hidden fees, taxes, device rentals, and more. Second, they ignore the fact that the price is a limited-time promotional offer that will end before your contract ends and then your price will skyrocket. Third, most cable TV subscribers also already pay for a streaming service.
Any argument about the cost of cable TV has to include the cost of fees and taxes. For example, some Comcast and Spectrum fees can add up to over $60 a month. You also need to include the fact that the price the writer is using is for a very basic cable package that does not include many channels people want. For example, some Comcast plans now start at $254.95 a month.
The other factor this author forgets is most cable TV subscribers already pay for a streaming service. Many of the most popular shows right now are not available on cable TV, such as The Handmaid’s Tale and Stranger Things. A recent study showed that almost 80% of cable TV subscribers also subscribe to Netflix or some other streaming service. So, now you need to add the cost of Netflix, Hulu, and/or Amazon (as many people pay for Amazon just to get the free shipping) on top of the cable TV bill.
Now the last question to ask is “can Mr. Vanghan-Nichols really watch that much TV?” According to the story, he subscribes to Amazon, CBS, Hulu, Netflix, and Sling TV with several add-ons. That is a ton of TV—far more than you would get with a cable TV package since you get access to a ton of original content. Yet you do have to wonder if anyone really needs all of that content at once and if anyone could ever watch enough TV to take advantage of it all. It is very likely that Mr. Vanghan-Nichols could easily lower his costs by rotating services he subscribes to.
What about the price hikes? Remember, most cable customers are facing their own prices hikes this month of anywhere from $5 to $10 a month. So, even with Netflix going up $2 a month or DIRECTV NOW recently going up $5 a month, cord cutting’s price hikes are still lower than that of traditional pay TV.
The next time cable TV companies like Comcast want to tell you how cable TV is cheaper, remember all the hidden fees and taxes.
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