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Why cable TV might still be cheaper than cord-cutting

tumblr_npcgifxaPA1qkbvdto1_500Last week, CBS Corporation announced its premium television network Showtime would be unleashed from cable and satellite, available as a standalone streaming service on Apple devices starting in July.

For $11 a month, subscribers will be able to watch both live and on-demand programming from Showtime’s library of content, including hit programs like Ray Donovan, Homeland, Shameless and Weeds. All without a cable subscription.

The move is the latest in what’s being seen as a trend of content distributors and programmers breaking free from the middle men of cable and satellite platforms — many of which the networks have feuded with in recent years — to target Internet media consumers directly.

In April, Showtime’s main competitor, Time Warner-owned Home Box Office (HBO), launched its Internet-only subscription service called “HBO Now,” Like Showtime, HBO Now offers episodes of current hits and classic series, including the Sopranos, Entourage, Last Week Tonight and VICE. Unlike Showtime, HBO Now does not offer live feeds of its service. The service costs $15 a month and is exclusive to Apple device users until July.

Last year, CBS made its own Internet offering called “CBS All Access” at a price of $7 a month, offering on-demand shows and live streams from a handful of CBS-owned local television channels. The move came less than a year after CBS feuded with Time Warner Cable over carriage of its over-the-air and cable networks in a handful of major American cities. CBS All Access is also seen as an answer to Hulu Plus, an Internet-only service backed by a consortium of CBS’s competitors (Comcast, which owns NBC; Disney, which owns ABC and the 21st Century Fox, which operates the FOX television network).

The services come as programmers try to get their content in front of so-called “cord-cutters” — those who have dropped their cable subscriptions for cheaper alternatives like Netflix, Hulu Plus and Amazon Instant Video — and “cord-nevers,” content consumers who have never subscribed to pay television.

Standalone Internet subscription services comes with an allure that consumers can pick and choose the programming they want. Like classic TV shows and movies? Netflix and Hulu Plus has plenty of those. Want HBO or Showtime without paying for channels you don’t watch?

But for those consumers who are used to having it all, over-the-top services might be more expensive than simply keeping a cable or satellite subscription.

The combined cost of Netflix, Hulu Plus and Amazon Instant Video tops off at around $25 a month for all three (Netflix at $9 a month, Hulu Plus at $8 a month and Amazon Instant Video around $7 a month — though the latter must be paid for in full annually). Tack on HBO at $15 a month, Showtime at $11 a month and Dish-backed Sling TV — which comes with ESPN, CNN and a handful of other live streaming channels — at $20 a month, and those costs start to look comparable to discounted cable packages.

Sports fans have it the worst — the only way to get ESPN without a cable subscription is Sling, and it only offers the games aired by ESPN. Football fans who want more than a football game every Monday will have to shell out between $200 and $350 for the NFL Sunday Ticket (the package is exclusive to DirecTV, but the satellite company offers a little-known, barely-advertised standalone Internet service aimed at people who live in apartments and other housing situations where a satellite dish isn’t possible). Similar streaming services are offered for hockey, baseball, soccer and other sports with prices that vary between $80 and $150 a year.

For now, non-sports fans who can part with some niche programming offered on digital cable and satellite will find cord-cutting options like Netflix, Hulu Plus and the newly-launched premium services to be attractive and cheaper alternatives. A $50 monthly bill for Netflix, Hulu Plus, Amazon, HBO and Showtime costs significantly less than a basic cable subscription (most of which start at around $60 and don’t include the two premium channels).

The biggest advantage over-the-top services have against cable: Most come with no long-term commitments. Subscribe to Netflix, binge watch Orange is the New Black, then ditch it for Showtime once Homeland starts. Sling TV not working out for you? Cancel it and spend that $20 somewhere else.

For people who want it all, though, or have diverse programming interests (i.e., people who can’t live without ESPN, HBO, Showtime, TBS, CNN and every out-of-market NFL game), cable and satellite are still the better bets. For now, anyway.

Disclosure: This article contains special hyperlinks to affiliate programs that help generate revenue for The Desk. Such hyperlinks are not intended to constitute an endorsement, sponsorship or warranty of any good or service.


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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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